Dec. 6, 2007

Three years ago, my 9-year-old nephew was visiting us from out of town. While he was in our care and custody, he was riding a mountain bike without a helmet, and suffered a critical head injury. About a year and a half ago, we suffered some problems with employment and lost our home to foreclosure. Now my sister and brother-in-law want to sue us for the liability on our homeowners insurance.

Though the homeowners insurance we had at the time of the accident should cover this, we are really scared that the size of the recovery will either prohibit us — or make ever getting affordable insurance again — virtually impossible.

We are both employed now with good jobs, and want to buy another home. Will this hurt our ability to insure our new home with a different insurer?

Tim, California

Dear Tim,

It's impossible to say with certainty whether a large claim like that would hinder your home insurance purchase in the future. Generally speaking, though, we have found that one claim, no matter how large, on your home insurance does not result in denials down the road. You can read more in One home insurance claim? Not a problem!

What will more likely come back to bite you is the foreclosure on your home and any other related credit problems. Your credit history is often accessed by insurers before they sell you a policy, and a bad credit history can make you a bad insurance "risk" in their eyes.

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