Insurance you didn't know you had

Drunken guests

A friend leaves your Super Bowl party, hops into his car and promptly plows into another vehicle. Everybody in the other car winds up in a hospital, and you get sued for serving alcohol to your friend.

There's plenty of variation in state laws, regional court cases and insurer policies, but in general the liability portion of your homeowners insurance can help pay your defense and any damages awarded, up to the limits of your policy.

And there's the rub, since many homeowners policies limit liability protection to $300,000 or so. You'd be smart to investigate getting at least a $1 million personal liability or umbrella policy if you're a homeowner.

Also, your coverage may depend on your not doing something egregiously stupid, like continuing to serve someone who was already drunk or serving a minor.

For details, talk to your insurance agent.

Stupid kids

Parents in most states can be held financially responsible for damage caused by their minor children. Fortunately, many homeowners insurance policies will help pay the bill -- depending on the child's age, the circumstances and the policy language.

A big exception: Insurance policies won't pay for damage resulting from "intentional," "malicious" or "illegal" acts.

If your little Sally accidentally knocks a baseball through the neighbor's plate-glass window, your homeowners insurance may kick in. If she hoists a brick through the same window, though, you're on your own for the costs of the replacement -- and for the therapy she so desperately needs. (See "Your kid's troubles can cost you a bundle.")

Stupid pets

You're out on a walk with Dudley, your mild-mannered pooch. Suddenly, the mutt gets it into his head that a passing pedestrian poses a deadly threat. He lunges to the end of his leash and sinks his fangs into her leg without warning. A few days later, the pedestrian sends you her rather hefty emergency-room bill, and there's talk of emotional distress and lost wages.

Once again, it's your homeowners insurance policy to the rescue -- maybe. Many insurers have gotten so sensitive to dog-bite claims that they won't insure owners of certain breeds or dogs that have already bitten someone. To get insurance, these owners often have to agree to an exclusion that prevents them from making a claim related to the animal.

Even if you are covered, you'll probably want to invest in a visit to the veterinarian (to see if there's a physical cause for the aberrant behavior) and in a good trainer (to try to ensure it doesn't happen again). A dog that bites, even once, is a huge liability to you and the people around you. (See "Your dog's bite could bankrupt you.")

Video: The hidden costs of a traffic ticket

The dorm thief

College dorms are packed with tempting goodies, including computers, televisions, music players and bicycles. The good news, according to the Insurance Information Institute: If you live in a dorm and you're considered a dependent of your parents, their homeowners insurance policy covers your stuff from destruction and theft -- with one big exception.

Few insurance policies cover the value of digital music collections or other computer files. So if the thief makes off with your iPod plus the computer that contains your music and video library, you wouldn't get financial help replacing files potentially worth thousands of dollars. That's yet another reason it's essential to back up all your files regularly and store the backups off-site or online.

Also, the protection of your parents' insurance disappears when you move off campus. When you're ready to kiss dorm life goodbye, pony up the $200 or so necessary to buy a renters insurance policy.

Continued: Grinches and fake greenbacks

< previous |  1 | 2 | 3 | next >