Most homeowners obtain a homeowner’s insurance policy to cover loss or damage to their homes. They know that the property is covered and they may know that there is some “liability” coverage under the policy, but that is the extent of their understanding of what the policy covers. Increasingly, homeowners are obtaining insurance policies on-line without an agent to advise them on what liability coverage they have, and what other liability coverages are available. The following summary explains the liability coverages often provided or available in a homeowner’s policy.
Liability for Bodily Injury and Property Damage Caused by an Accident
The basic liability coverage under a homeowner’s policy states the insurer will pay amounts that the insured becomes legally obligated to pay as damages for bodily injury or property damage arising out of an accident.
The standard homeowner’s policy contains definitions of bodily injury and property damage. Bodily injury is usually defined as bodily harm, sickness or disease. Indiana courts have held that emotional distress that does not arise from a bodily touching is not “bodily injury” as defined in many insurance policies. See Indiana Ins. v. Wayne Township Bd. Of School Comm’rs., 650 N.E.2d 1205 (Ind. Ct. App. 1995). Property damage is usually defined as physical injury to tangible property.
To be covered under this section, the bodily injury or property damage must arise out of an accident. The policy may not define the word accident, but Indiana courts have defined the word accident in a liability policy as “an unexpected happening or event without an intention or design.” If bodily injury or property damage was intended by the insured then there is no accident and no coverage under this section of the policy.
Contrary to common misconceptions, most policies do not require the accident to happen on the insured property in order to be covered. Accordingly, under many policies, if the insured negligently causes bodily injury or property damage away from the insured property, the liability for that damage would fall within the general insuring agreement. However, homeowner’s policies commonly contain exclusions to the liability coverage which provide there is no coverage for bodily injury or property damage arising out of such things as:
- Ownership, maintenance or use of motor vehicles, watercraft, or aircraft
- Business pursuits or professional services
- Transmission of communicable diseases
- Lead, mold, fungus
- Child molestation
- Conduct by or at the direction of any insured intended to cause injury
Liability for Personal Injury Offenses
Many policies also contain a second type of liability coverage that even sophisticated insurance consumers may not realize is available or provided. This is typically referred to as “Personal Injury Coverage” or “Personal Injury Offense Coverage.” It covers the insured for claims against the insured for injuries arising out of certain enumerated offenses such as:
- false arrest, imprisonment, malicious prosecution and detention;
- wrongful eviction, entry, invasion of rights of privacy;
- libel, slander, defamation of character;
- discrimination because of race, color, religion or national origin.
Unlike the first type of liability coverage in a homeowner’s policy for bodily injury and property damage caused by accidents, Indiana courts have held that because some of the conduct described in the Personal Injury Offense coverage includes an element of intent, coverage is afforded even for intentionally caused injuries. Indiana courts have also held the claims that are covered by Personal Injury Offense coverage do not have to use the exact words or legal theories of the offenses listed, as long as the complained-of conduct can be characterized as one of the offenses listed.
The Personal Injury Offense coverage typically excludes injuries arising from:
- The violation of a criminal law by or with the knowledge or consent of any insured.
- An offense directly or indirectly related to the employment of the injured person by the insured.
- The business pursuits of an insured.
Defense of Claims
Like an auto policy, the homeowner’s policy also usually states that the insurance company will defend the insured by investigating claims made against the insured and hiring a lawyer to defend the insured in the event someone files a lawsuit against the insured making claims within the coverage of the policy.
The liability coverage is an important part of a homeowner’s insurance policy that provides protection that a homeowner often does not realize he or she has. Read your homeowner’s insurance policy to determine the extent of your liability coverage.
© Riley Bennett Egloff LLP
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