What is the minimum amount of liability coverage for homeowners insurance?
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Asked August 1, 2011
A typical homeowners insurance policy has a face value of up to $100,000, including limits for personal property loss, medical, or personal injury liability, and property damage liability, among other things. Of course, if your home has a value greater than $100,000, you will need to purchase higher limits, and those will include higher limits for other parts of the policy as well. Personal property insurance does not vary much according to the net value of the policy, and will generally cap out at around $2000 to $2500 for a basic policy.
If you have more than $2500 in personal property, including your jewelry, furniture and household appliances, you may want to purchase a separate rider that includes a higher personal property limit, or pick up a stand alone personal property insurance policy to cover the outstanding differnce between what you own and what your home insurance policy will cover.
For additional liability coverage, many people decide to use an umbrella policy. Umbrella liability insurance is a multi-purpose insurance coverage that will pay out the difference between what your insurance covers and what you actually owe on both personal injury and property damage liability claims. Umbrella policies insure the home and auto, meanign that you can make multiple claims against an umbrella policy, for either your home or your car, up to the limit of the umbrella policy. Keep in mind, however, that an umbrella policy is a supplemental type of insurance and will not become effective until after your regular insurance limits have been reached. You cannot substitute umbrella coverage for regular insurance, but you can make your financial future more secure by adding more coverage using an umbrella policy.
Answered August 1, 2011 by Anonymous