When it comes to homeowners insurance, most people focus on protecting their property from fire, theft, or storm damage. But one of the most overlooked—and most important—aspects of your policy is liability coverage. This protection kicks in when someone is injured on your property or if you accidentally cause damage to someone else’s property. And if you’re hiring contractors to work on your home, ensuring they’re properly insured could save you from financial disaster.

Understanding Liability Limits

Every homeowners insurance policy includes personal liability coverage, typically starting around $100,000 but often ranging up to $500,000 or more. This coverage helps pay for medical bills, legal fees, and settlements if you’re found responsible for an injury or property damage.

For example, if a guest slips on your icy driveway or a tree from your yard damages your neighbor’s fence, your liability coverage helps cover those costs. But here’s the catch—if damages exceed your policy limit, you’re personally responsible for the rest.

That’s why many insurance professionals recommend reviewing your limits regularly and considering an umbrella policy for extra protection. An umbrella policy can provide an additional $1 million or more in liability coverage for a relatively small cost each year.

The Hidden Risk of Uninsured Contractors

Home improvement projects often involve hiring outside help—roofers, electricians, painters, or landscapers. But before you hand over the keys or cut that first check, it’s critical to make sure any contractor working on your property carries their own liability and workers’ compensation insurance.

If a contractor is uninsured and one of their workers gets hurt on your property, you could be held liable for medical expenses, lost wages, or even lawsuits. Similarly, if they accidentally damage your home or a neighbor’s property, and they’re not covered, your own insurance might have to step in—potentially driving up your premiums or leaving you with out-of-pocket costs.

Protecting Yourself and Your Investment

Your homeowners insurance does more than protect your house—it protects your financial future. By maintaining sufficient liability limits and ensuring contractors are properly insured, you can avoid costly surprises if something goes wrong. A few minutes of due diligence today can save you thousands—and a lot of stress—tomorrow.

About the Author:

David Dandaneau is a client relations analyst that covers the insurance and financial services industry. He is known for his insightful analysis and comprehensive coverage of market trends and regulatory developments.