Liability, the part of the file that answers to somebody else

Liability is the part of an insurance file that is not about your things at all. The Department of Insurance glossary defines liability insurance as coverage for all sums that the insured becomes legally obligated to pay because of bodily injury or property damage, and sometimes other wrongs, to which an insurance policy applies. Every clause in that sentence is doing work: legally obligated, not morally; to which an insurance policy applies, not to every claim that can be made.

Coverage E, and the limits written into it

In a residential policy the personal liability section is Coverage E. It provides coverage in the event you or a resident of your household are legally responsible for injury to others, and it normally provides a defence as well as paying damages, as the insurance company deems appropriate. The Department is equally clear that it has edges: the liability coverage will not protect you in all situations, such as an intentional act, and all of the exclusions and specific language can be found in the policy itself. The licensing material adds a definition from the property owner’s side — personal liability coverage protects the insured against claims alleging that a property owner’s negligence, or an inappropriate action, resulted in property damage or bodily injury to another.

Coverage F is a different promise

Alongside it sits medical payments to others, which pays reasonable medical expenses for persons accidentally injured on your property; the Department’s example is a neighbour’s child injured while playing in your home. Medical payments coverage does not apply to your injuries or injuries of those who reside in your household, and it is not a substitute for health insurance. Business activities are excluded as well.

Renting does not remove the question

A landlord does not provide insurance for a tenant’s personal property, and a renters policy carries the same two liability letters as a homeowners policy. Under a renter’s policy the Department describes Coverage E as generally subject to a minimum of $100,000 and Coverage F as generally subject to a minimum of $1,000. Generally is the guide’s hedge in both places. Personal property is an amount the insured designates, subject to a company minimum, and loss of use is 20% of that limit.

The same idea, at the wheel

Auto liability is the identical concept under a different contract. The glossary defines it as coverage for a policyholder’s legal liability resulting from injuries to other persons or damage to their property as a result of an auto accident. California sets a statutory floor for it: $30,000 for the death or injury of any one person; a total of $60,000, the Department writes, for the death or injury of more than one person in any one accident; and $15,000 for damage to the property of other people. The auto guide here works through what each figure actually answers. A household that carries a careful homeowners liability limit and a statutory-minimum auto limit has thought hard about one half of the same exposure.

Buying height rather than width

When the underlying limits are not enough, the instrument is an umbrella. The Department’s licensing material describes an umbrella or excess liability policy as one written to provide excess limits over existing liability provisions a customer already holds — automobile, homeowners, liability and watercraft policies among them — adding that it may provide additional coverages not provided by the underlying policies, in both personal and commercial forms. It sits above what you already hold rather than replacing it.

How much is a question about what you have

The Department declines to name a figure, which is the honest answer, and offers a test instead. You may want higher liability limits than the law requires; and in general, it adds, the more assets you have, the more you could lose in a lawsuit. Its suggestion is to discuss the situation with an agent, broker, insurance company or financial advisor rather than pick a round number.

The Palmdale reason this guide exists

There is a local argument for reading the liability pages carefully. The FAIR Plan is the residual option for property that the ordinary market will not write, and its standard offering is a fire policy: the Department states that no coverage is provided for liability or coverage for other perils such as burglary, and that the Plan’s bare-bones residential policy forces homeowners to purchase an additional policy, at an increased cost, to have coverage for liability, water damage, and other common perils. Palmdale has mapped very high fire hazard severity zones south and west of the California Aqueduct, though the remainder of Palmdale is not under significant wildfire hazard risk. For a household inside those mapped areas, a move to the FAIR Plan is also, quietly, a decision about liability — and that is a decision better made on purpose.