What level of liability coverage do I need for a home addition?
We’re gearing up for a significant addition to our home that will last over four months and involve multiple subcontractors. We intend to remain in the house during the construction process.
The builder’s contract specifies that they will carry $2 million in general liability insurance ($1 million per occurrence), but they have indicated that if we desire additional coverage, it’s our responsibility to secure it. Our current homeowners’ policy offers $500,000 in liability coverage.
Do you think a total of $2 million combined with $500,000 is sufficient? It seems like a lot to me, but I’m not an expert.
Are there any other important questions I should ask the builder regarding their insurance coverage?
When it comes to liability coverage for a house addition, ensuring you have adequate protection is critical, especially since you’ll be living in the home during construction and there will be multiple subcontractors involved. Here’s how to evaluate your situation:
Total Coverage: With your builder’s $2M liability insurance and your homeowners’ $500k combined, you have a total of $2.5M in liability coverage. This is generally considered a good amount, especially for a residential property. However, assess your personal risk and the potential for liability claims in your specific circumstances.
Large Projects: Major renovations can lead to unexpected accidents, so consider the size of the addition and the complexity of the work. If a mishap occurs involving a subcontractor or even a neighbor, having adequate coverage is essential.
Increased Risks: Living in the house during construction can raise risks (e.g., accidents involving family members, damage to your property or neighboring properties). Consider whether increasing your homeowners’ liability coverage might be warranted.
Builder’s Insurance Details: Ask your builder for more details on their insurance:
How will subcontractors’ insurance work in case of an accident?
Consult Your Insurance Agent: Discuss your specific situation with your insurance agent. They can help clarify your current coverage, any gaps, and whether purchasing additional liability protection is advisable.
Consider Umbrella Insurance: If you’re still concerned about liability exposure, you might also look into an umbrella insurance policy that could provide additional coverage above and beyond what you currently have.
In summary, $2.5M in total liability coverage might be sufficient, but it’s worth consulting with a professional to determine what best fits your needs based on your situation and the scale of the project.