What Happens In A Renters Insurance Liability Claim?

It is our sincere hope that you’ll never have to find out what happens in a renters insurance liability claim.  But it’s fair to wonder how the process works, and if you have Glendale Renters Insurance you should be aware what your duties are, how it works, and what happens when a liability claim is filed on renters insurance.  It’s more straightforward and less involved than you might expect, most of the time.  Learn more below our Video Guide to Arizona Renters Insurance.

What Happens In A Renters Insurance Liability Claim First?

As soon as you become aware of a potential renters insurance liability claim, you are obligated to report that potential claim to your insurer.  Note that we say “potential claim” and not “claim.”  In a situation where liability might arise, you need to make your insurance aware of any situation that might reasonably give rise to a claim.  Whether or not you’re actually responsible for the loss is entirely irrelevant.

In other words, when someone makes it known that they are interested in suing you for a loss for which they perceive that you’re responsible, your first call should be to your insurance.  At this stage, you don’t need to have every single detail available, though all information is helpful.  By the same token, of course, you’re obligated to report to your insurance any suit that is filed against you for which the insurance company may be responsible.

There are two reasons for this.  First, the insurance company needs to know about any loss that they might need to pay.  That’s just common sense.  Even if you don’t think there’s coverage, even if you think you’re actually at fault, and regardless of the situation.  Insurance only pays if you are or appear to be at fault, so don’t think “paying for this is my responsibility, so insurance won’t.”  That’s what insurance is for.

Secondly, your insurance has a duty to defend you.

Duty To Defend In A Renters Insurance Liability Claim

Your insurance company has a duty to defend you in a renters insurance liability claim.  That means that your insurer is obligated to pay for representation.  They’re defending you, and the lawyer is defending you – not the insurance company.  This duty to defend generally arises as soon as the insurance company is aware of a claim.  This ties back to the above, you need to put the insurer on notice of a claim or potential claim so that they have the opportunity to defend you.  If the insurer could have defended you and you lose, they are unlikely to pay because you have prejudiced the situation against them by not allowing them to defend against the claim.

Keep in mind that the duty to defend is broader than the duty to indemnify.  This concept is nearly sacred to insurance.  Insurers spend a great deal of time, money, and effort defending against claims that they are highly unlikely to pay.  Simply put, it’s a great deal more efficient to defend against a potential claim so that it doesn’t have to be paid at all than to litigate whether or not they’re responsible to pay for it.

Note that in a renters insurance liability claim, your insurance company may well send a “reservation of rights” letter.  In essence, this says that they will defend you against the claim for the time being, but they have not yet accepted liability for paying the claim because they don’t have all of the information necessary to make that determination.  Broadly, they are obligated to defend you until one of several things happens:

• They are determined not to be responsible for paying the claim (no coverage situation).
• They have paid the policy limits in a judgement.
• They have settled the claim for the policy limits.

The sooner you notify your insurer of a renters insurance liability claim, the sooner they are able to begin to defend you.

Policy Limits In A Renters Insurance Liability Claim

First and foremost, defense costs on a renters insurance liability claim are generally considered to be outside the policy limits.  In other words, any money the insurer spends to defend you is separate from and does not count against the limits of the policy.  Defense costs can be staggering, so this benefits both you and the insurer – you’re not worried about burning through your policy limits with the cost of a lawyer and the insurer is able to continue to defend against a suit for which they may be responsible even if they spend more than the policy limits to do so.

Your policy limit is the amount of liability coverage that you have on your Glendale Renters Insurance.  It’s generally at least $100,000, and many people elect for higher limits because liability claims on renters insurance can be significant, especially those involving bodily injury or major property damage such as in an apartment fire.

Your renters insurance liability claim will be defended by and paid for by your insurer until the policy limits are exhausted or until the company is determined not to be responsible for the claim because there is no coverage.  Since liability is a broad coverage, that’s a comparatively rare situation.

What Happens In A Renters Insurance Liability Claim?

You notify your insurer.  They begin to defend you, possibly under a reservation of rights letter.  They pay the claim so long as it’s something they’re responsible for.  You walk away none the worse for wear, and ideally with your assets intact and without future monies owed though that can vary depending on the specifics of the situation.

The national average price of renters insurance is just $187.00, according to the III. That works out to as little as fifteen dollars per month.  The vast majority of families can budget renters insurance easily at those prices.  

Additionally, it's important to note that renters are at a significantly higher risk of experiencing loss than homeowners.  Renters occupy roughly one third of total housing stock in the country, and yet they are fully fifty percent more likely to experience theft than homeowners, according to the Bureau of Justice Statistics.

It only costs a few dollars a month to protect your family, and this cheap renters insurance is a great way to mitigate the additional risks that come with being a renter.

 That’s incredibly inexpensive for the coverage that you get, especially considering that defense costs are entirely the responsibility of the insurer on a claim that is covered.  Those defense costs alone are tens or hundreds of thousands of dollars, enough to bankrupt most people before the judgement or settlement is even arrived at.

To find out more about how affordable it can be to protect yourself against the risk of liability with renters insurance, just call (800)892-4308 or click to get covered - whether you need Glendale renters insurance quotes online or coverage anywhere else!

Effective Coverage offers the nation's only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.

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