When you purchase home insurance in Canada, you’ll see that not only do you have insurance on your home and/or contents, but there’s also a separate item of coverage in place for your personal liability. In most cases, a default amount of $1,000,000 or $2,000,000 will be provided for this type of loss.
What does personal liability insurance cover? There are two main forms of liability to which an individual can be exposed, both of which can be covered by personal liability insurance:
Personal liability: this form of liability arises out of your personal actions, anywhere in the world, if you negligently cause another person to sustain an injury or damage to their property.
For example, while enjoying a beautiful day on the golf course, your tee shot might accidentally hit another golfer on the head – suddenly, you may find yourself being sued for his injuries. Or, while visiting your friend’s house, you might accidentally knock over her umbrella stand, accidentally causing thousands of dollars of damage to her imported marble floor – and you’re responsible to financially restore the floor to the condition it enjoyed before you negligently damaged it.Remember, the key to this coverage is the concept of negligence: an unintentional act that results in covered losses sustained by a third party. Standard personal liability insurance will not cover deliberate acts, such as intentional violence against another person, libel or slander.
Premises liability: this form of liability arises out of your ownership or occupation of a premises, such as your home, condo, or even a hotel room that you book for a vacation. Premises liability is designed to protect you in the event that someone is injured on such a premises.For example, while attending a dinner party at your home, one of your guests may step through a weak spot in your deck and injure her leg. Or, in winter, your neighbour might slip and fall on your icy steps, knocking out several teeth. In both examples, the injured person can sue you for the cost of their medical treatment, lost wages and more, on the grounds that you were negligent in protecting them from harm.
What about my children – are they covered? The short answer is: yes, but to varying degrees. Every insurance provider structures their policy in a unique way, but in most cases, your children will be automatically included in your personal liability insurance coverage as long as they are dependant minors in your care. For example: if your ten-year-old accidentally throws a ball through your neighbour’s stained glass front door, your personal liability insurance can step in to financially assist you in repairing their damage. Some insurance providers, including Square One, will continue to protect your children while they are temporarily away at school – as long as they remain dependant upon you.
Are pets covered as well? Pets are somewhat less predictable: some insurance providers restrict the amount of coverage they provide for losses caused by certain breeds of dogs, exotic animals, and even pet insects and vermin. To be confident in your insurance protection, read your policy and discuss your pets with your insurance provider to confirm the amount of coverage you already have, and determine how to improve your coverage if necessary.
How does personal and premises liability insurance actually help in the event that you’re sued? If you are sued, either for personal liability or premises liability, your first step will be to report a claim to your insurance provider right away. Being served with legal papers is an unpleasant surprise, and it’s important to treat the matter with urgency in order to avoid a default judgment against you. Upon receiving notice of your situation, your insurance provider will assign an experienced liability loss adjuster to assist you.
If your loss falls within the coverage provided by your personal or premises liability insurance, your adjuster will help you through the process of choosing an attorney and your insurance provider will pay for the cost of your legal defence. Other potential costs, including lost wages while you’re in court and compensatory damages awarded against you, will also be covered up to your limit of liability coverage. Depending on the nature of the policy you purchased, a deductible may or may not apply to the claim.
Keep in mind that personal liability insurance only covers your personal actions, and premises that you occupy as a personal residence. Personal liability will not cover you for business-related losses, such as injuries or property damage that you cause in the course of your work, or injuries that other people suffer when visiting your place of business. If you buy, rent, use or occupy a premises (including your home) for business purposes, you must discuss this with your insurance advisor; they will assess your needs and help you find liability insurance coverage that will protect you in the course of your work, as well as the premises where you carry out your business.
Personal liability insurance also does not cover you for losses arising out of your ownership or operation of most watercraft, aircraft and powered vehicles. To ensure you are not facing a gap in coverage, speak to your insurance provider about any watercraft, aircraft or powered vehicles you own or operate. These often include boats, jet-skis, ATVs, dirt bikes, large drones, and more – most of which are excluded from your personal liability coverage, but which you often can insure separately in order to be protected while you use them.
You can see how important it is to carry sufficient liability coverage. Yes, you need insurance if your kitchen catches fire, but if someone is severely injured on your property or as a result of your personal actions, the cost of defending yourself against a lawsuit can be significant. If compensatory damages are awarded against you, your financial resources can be severely and even permanently depleted. Personal and premises liability insurance can help avoid this negative outcome.
For complete coverage and exclusion details, please refer to your policy wording – and contact your insurance provider to ensure you have adequate protection. To get a quote, contact Square One at 1.855.331.6933.