If you’ve ever been sued, you know that legal fees add up fast. It doesn’t matter if you’re not at fault. You’ll still need to hire an attorney to defend your case. If think you’ll never get sued, think again. Here are some common ways it can happen:
- A visitor trips and falls at your home
- A drunk guest gets into a car accident after leaving your party
- A child is injured in your pool
- Your dog bites someone or attacks another pet in the neighborhood
- Your home-based business is sued by a customer
Here’s the question: When one of these unfortunate incidents happens to you, will your homeowners insurance cover the legal fees? The answer: It depends.
Covered Causes of Loss
To determine whether your homeowners insurance will cover legal fees, you need to determine whether the cause of loss is covered by your homeowners insurance policy. It’s important to read your policy carefully and understand any exclusions.
For example, let’s say you’re sued because your dog bit someone. This is a pretty common scenario. According to the Insurance Information Institute, dog bites accounted for more than one-third of homeowners insurance liability claims payouts in 2014. Many insurance policies cover dog bites, so if you have a homeowners policy, you’re probably OK. However, these policies may place restrictions on dog breeds known to bite, so even if dog bites are typically covered, you need to read your policy to ensure your dog breed is not excluded.
Other common exclusions found in homeowners insurance policies restrict or deny coverage for losses connected to business pursuits. For example, if you run a bakery business out of your home and you are sued for food poisoning, you may find that your homeowners policy will not pay to defend you. If you have home-based business, you probably need a separate business insurance policy.
The Bottom Line
If the cause of loss is covered, your insurer will most likely hire an attorney to defend you, up to your policy’s limits. If the cause of loss is not covered or subject to an exclusion, you’ll have to foot the bill for the attorney and any resulting damages.
As a policyholder, you have several responsibilities. First, you need to understand your policy. If you are uncertain about anything, talk to your agent. Don’t assume you’re covered if you don’t know for sure. Your second responsibility arises when a claim occurs. As soon as you learn of the claim against you, call your agent immediately. Also provide all pertinent details in writing. Once your insurer has the necessary information, you can discuss legal fees along with other issues. As always, Higginbotham Insurance is here to help. Contact us to schedule a homeowners insurance policy review.