Liability Coverage, Deductibles and Your Home Insurance Policy

Two weeks ago, I provided an overview of the coverage contained in a Texas home insurance policy (see Last week, we dug deeper into the policy with a look at the four categories of property coverage including dwelling, other structures, personal property, and additional living expenses (see In this week’s post, we’ll examine personal property, medical coverage, and policy deductibles.

Medical Coverage: This coverage is designed to cover medical cost if someone is hurt on your property or in your home whether they are invited or not. It does not cover the homeowner or anyone who lives in the home. The limits of coverage usually range from $1,000 to $5,000 and the difference in cost between these two amounts is nominal.

Medical coverage can be used whether or not the homeowner is legally liable for the injury. Examples of how it may be used include medical expenses incurred to take someone to the hospital to be examined after a fall, stitches, or even a run to the dentist because a tooth was knocked out. Other covered cost include x-rays, nursing care, and the cost of an ambulance. If the injury exceeds the amount of medical coverage, it may be covered by the policy’s personal liability coverage.

Personal Liability: If someone comes onto your property, invited or not, and is hurt, you could be found negligible. Personal liability coverage is designed to protect you financially if you’re found responsible, or legally liable. Coverage is extended to anyone who’s not a member of your household; it does not cover anyone who resides in the home.

This coverage may apply to someone who’s been bitten by a pet, or who slips and falls in your yard or home, or when your child’s baseball or softball damages a neighbor’s home. Personal liability limits usually start at $100,000 and go up to $500,000 with the difference in cost being nominal.

I typically recommend a minimum of $300,000 in personal liability coverage for most clients. I recommend $500,000 of liability coverage when a family has a combined household income of $125,000 or more, or has a swimming pool or trampoline.

Policy Deductibles: The amount a homeowner will pay out of pocket on a claim before the insurance company pays is known as the policy deductible. This may be expressed as a percentage of the dwelling coverage such as 1% or 2% or as a dollar amount such as $1,000, $2,500, etc. There are generally two or three deductibles on a home policy depending on the insurance company. The most common two are wind and hail and all other perils. If there is a third deductible on the policy, it will be for hurricanes and names storms (tropical storms).

The wind and hail deductible applies exclusively to damage to the home that’s caused wind (straight line or tornadic) and hail storms. Damage can be to the roof, windows, siding, gutters and downspouts, as well as to fences and other separate or detached structures. Hail claims are typically the most or second most common home insurance claim in Texas. Most carriers will write a minimum wind and hail deductible of 1% of the dwelling amount.

All other perils include damage to the home caused by fire, smoke, water leaks, theft, vandalism, falling objects, etc. If the policy type operates on a named peril basis, then the policy will provide a specific list of perils which are covered. If the peril is not listed, then this type of policy does not cover that specific loss. Alternatively, if the policy is a broad form type, it’s will provide a list of exclusions; anything that’s not excluded is covered. Many carriers will write a policy with a minimum all other perils deductible of $1,000 or 1% of the dwelling amount.

Some insurance companies automatically include a hurricane deductible regardless of where a home is located in Texas. Other companies only list one if the home is located in a Texas coastal county, considered Tier 1, or an adjacent county, which is referred to as Tier 2. Hurricane coverage only comes into play when damage is sustained from a named hurricane or tropical storm. Some carriers will write a 1% hurricane deductible, but many companies will start at 2% and write up to 5%.

What do you think? Share your questions, comments, and experiences with me on my Google +, Facebook, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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