insurance

Do you need yard sale insurance?

Yard sale
Highlights
  • The average jury award in personal injury lawsuits in 2006 was $978,848.
  • Hold yard sales often? They could be classified as a business.
  • Many front yard entrepreneurs are willing to take the liability risks.

The first goal of any yard or garage sale is to make money on castoffs. They're also a great way to recycle unwanted items, clear clutter from our homes and meet the neighbors.

But a yard sale also can prove costly. What if a bargain hunter slips and fall, drops a microwave on his or her foot or accidentally gets sliced by Uncle Bob's Civil War saber on your property and decides to sue you for damages?

Most homeowners insurance and rental policies will cover you for bodily injury and property damage that you or your family members cause to others, including court costs and judgments against you. However, the coverage amount is typically limited, often to $100,000, according to the Insurance Information Institute.

Many policies also have a no-fault medical component to their liability coverage that allows someone who is injured on your property to submit their medical bills directly to your insurance company. However, that coverage is often capped at $1,000 to $5,000 on average, according to the institute.

The first yard sale risk is that a court judgment could well exceed your coverage limits. According to Jury Verdict Research, the average jury award in personal injury lawsuits in 2006 was $978,848.

The solution? Talk to your insurance agent about additional liability coverage and/or an umbrella plan that can insure you for $1 million or more, with additional coverage for things like libel and slander.

But wait, there's more -- risk, that is. Should your insurance company determine that you were conducting your yard sale as a business, your homeowners insurance may not cover you at all.

Typical language under "policy exclusions" in a standard homeowners policy reads: "Personal liability and medical payments to others do not apply to bodily injury or property damage arising out of or in connection with a business engaged in by an insured."

"If someone is really holding a garage sale on a constant basis, then it would become more of a business," says Trace Meek of Condon-Meek Inc. insurance agency in Clearwater, Fla.

How do you know if your garage sale qualifies as a business? That's one of those insurance gray areas.

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"If you have a yard sale once a year, or even once a season, that's not a business per se," says Jeanne Salvatore, senior vice president and consumer spokeswoman at the Insurance Information Institute. "If this yard sale is now an income-producing situation, then you have a small business and you need business insurance."

Joanna Augustynski of Allstate Insurance agrees. "It has more to do with the purpose of the yard sale than the frequency," she says.

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