Insurance Coverage

Homeowner’s Insurance policies cover this form of legal liability in the event that anyone suffers an injury while on the insured property. Certain actions of the policyholder, which occur away from the insured property, may also be covered. Even if a house is under construction and has no contents to be protected, the homeowner should obtain liability insurance to protect against claims of workers and even trespassers.

When a homeowner purchases liability insurance, part of the insurance company’s obligation is to provide a defense in the event of a lawsuit. Even though the insurance company selects the lawyer and must approve the payment of all legal fees and other expenses of the lawsuit, the lawyer represents the policyholder. Under most types of liability insurance, the insurance company has the contractual right to settle or defend the case as it sees fit. The homeowner has an opportunity to express opinion, but the company typically has no obligation to obtain the policyholder’s consent or approval.

A suit against a homeowner may involve several different claims, some of which may be covered by the liability insurance policy and some of which may not be covered. The insurance company is obligated to provide a defense for any claim, which could be covered, but the company may not be obligated to pay the damages for certain types of claims. Since liability policies typically do not provide coverage for intentional acts, there may be a question as to whether the policyholder acted intentionally. Negligent or accidental acts are generally covered, however, papers filed in court might allege both negligent and intentional actions. In such a situation, the insurance company may send the homeowner a Reservation of Rights letter, a notice that the company is paying for the defense for the claim but is not agreeing that it is required to pay for any and all losses under the terms of the policy.

Limitations and exclusions can alter the provisions of coverage in a policy. A limitation is an exception to the general scope of coverage, applicable only under certain circumstances or for a specified period of time. An exclusion is a broader exception which often rules out coverage for such cases as intentional acts, when the policy covers damages due to negligent acts.

Insurance companies and policyholders have contractual obligations which must be satisfied to ensure resolution of claims. Insurance policies list specific things a policyholder must do in order to perfect a claim once a loss has taken place. These duties are known as contract conditions. Policies typically require an insured to give prompt notice of any loss or the time and place of an accident or injury. Liability claims require the policyholder to give the insurance company copies of any notices or legal papers received.

The insurance company may ultimately refuse to pay part or all of a claim. The insurance company may take the position that the loss is not covered by the policy, perhaps because it was the result of some intentional act. Or the insurance company may allege that the policyholder took some type of action that rendered the policy void. Because insurance policies are contracts and open to interpretation by the courts, policyholders may be able to use the legal system to reverse such decisions. If an insured homeowner opts to consult an attorney to pursue such remedies, the chosen attorney ought to be one other than the one hired by the insurance company to represent the homeowner.


Inside Insurance Coverage