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Spring is in the air and home owners have begun the seasonal rite of rolling up garage doors and schlepping out all their unused possessions to cash in on garage sales.

A garage sale is a good idea when your home is bulging at the seams and you can make some extra cash from stuff that's otherwise only collecting dust. Just be sure your homeowners insurance policy won't leave you holding the bag.

If there's an accident on your property during the sale, you could be liable and, chances are, you don't have enough coverage, according to the Insurance Information Institute of California.

"The standard maximum doesn't even meet the need. The average most home owners have is between $100,000 to $300,000 and studies show that jury verdicts (in liability suits against home owners) average around $500,000," said Pete Moraga, a spokesman for the institute.

Before setting up shop, insurance experts advise, check your insurance policy or talk to your agent to be sure you have ample protection.

"It might not be interesting reading on a Saturday night, but the more you read, the more you know about your policy and the better off you are," added Moraga.

In addition to checking your liability coverage, make sure you arrange your sales items so there is enough space for people to comfortably move around without tripping up. Especially avoid placing sharp and otherwise hazardous items where they are more likely to cause harm.

Then, determine what your policy will and won't cover, should there be an accident.

  • If your garage sale is a one-time event for the sole purpose of selling unwanted personal items, your homeowners policy likely will provide liability coverage. It's up to you to make sure you have enough.
  • If your garage sale is a regular money-making event, your homeowners policy may not cover you.

    "There are people who have garage sales every other week. If you are doing this as a regular money-making event, you need business insurance to cover that," Moraga said.

  • If you and your neighbors are planning a neighborhood yard or garage sale and plan to make a profit, you also may not be covered.

    "Sometimes the whole block gets together for a street sale. If it's big enough you may have to also check with the city. Some cities require you to get a permit," says Moraga.

  • If the joint event is used to raise money for a charitable organization and you do not expect to receive any money, a permit may be required, but the yard sale may be covered under the homeowners policy.
  • If your garage sale is being sponsored by an organization with the intent to make a profit, you should check the liability coverage of the organization. A church, for instance, is likely to be covered under its insurance policy. Smaller, less formal organizations may not be.
  • If you decide to sell your unwanted items at a flea market or swap meet, there's a good chance your home owners policy will not apply. You should check the liability coverage of the flea market or swap meet or ask you insurance agent about additional coverage.

    "You'd think people would know that, but a lot of people don't understand where the line of demarcation is," Moraga said.

    Moraga says you shouldn't sell items if you are aware they are unsafe or hazardous, including recalled items. If you do and someone is injured because of the item, you'll slip into a gray area of insurance coverage.

    "You may want to ask an attorney about his one. How does someone prove you knew? Most of the time, people who sue look to deep pockets and chances are they will look at the manufacturer's liability, but you may want to ask an attorney about this one," Moraga said.

    Another gray area is coverage for five-finger discounts at your garage sale.

    "If something is stolen, it depends on how much it is worth and whether it is worth filing a claim for. Certainly, your policy covers you for theft, the gray area if its at a swap meet," said Moraga.

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