Personal liability homeowners insurance protects you financially if you’re responsible for damages or injuries to others. This is true both in and out of your home.
Personal liability coverage is typically included as part of your homeowners policy and provides coverage for yourself and household relatives if you’re legally responsible for damage to someone’s property or for an accidental injury.
Quick Facts
Personal liability coverage is part of homeowners, renters, and condo insurance policies.
Your liability coverage doesn’t end when you leave your home.
Personal liability coverage is often used to cover another person’s medical and legal costs and pay for repairs or replacement of damaged property.
What does personal liability insurance cover?
“Personal liability insurance protects the named insured and resident household members in the event of an accident that results in bodily injury or property damage for which you are legally liable,” says Chris Arnold, principal at Fitzgibbons Arnold & Company.
While personal liability is technically part of your homeowners insurance, it often applies to damages that occur outside your property.
Bodily injury to someone else on your property
If someone is injured at your home or property, you may be liable for any medical costs they incur, or legal fees if they sue you. Coverage extends to accidental injuries and injuries sustained due to negligence. Injuries that would be covered under your personal liability coverage may include:
A guest falls down your basement stairs.
A contractor slips on ice on your driveway.
Someone is injured tripping over your dog or cat.
A houseguest injures themselves due to a faulty handrail or broken step.
Read More: Does Homeowners Insurance Cover Dog Bites?
Property damage
If you accidentally damage someone else’s property, your personal liability coverage will help pay to repair or replace the damaged property. This could include the following scenarios:
Your child accidentally throws a baseball through your neighbor’s window.
A tree on your property falls and causes damage to a neighbor’s house or shed.
Your dog ruins a neighbor’s fence.
Your child dents someone’s parked car while riding their bicycle.
Legal fees
If you cause harm to someone else or damage their property, they may be content to receive financial compensation for the injuries sustained or the replacement of their belongings or property.
In some instances, though, a person may seek financial compensation for their damages by suing you. Personal liability coverage pays for legal costs to defend you in court. It will also cover any legal fees or court awards up to the policy limit if a court of law finds you liable.
See Also: What Does Homeowners Insurance Cover?
What does personal liability insurance not cover?
Not all injuries in your home or accidents are covered under personal liability coverage. Sometimes, you may be required to pay for damages out of your pocket. These instances could include the following.
Bodily injury to a member of your household
Injuries often occur in your own home or on your property. While an injury can lead to expensive medical bills and a long recovery, only injuries to those who live outside your household are covered under personal liability insurance. If you or a child suffers an injury in your home, your household health insurance policy would potentially cover your medical expenses, not your homeowners insurance.
Keep in Mind:
Preventable injuries in or around the home sent 46.8 million Americans to emergency rooms or the doctor’s office in 2020, according to the National Safety Council.[1]
Intentional harm
Your personal liability insurance won’t cover injuries you or a household member purposely inflict on someone else. You’ll have to pay out of pocket for any financial damages a court may award the injured parties. If you or a family member commits a crime, you can’t file a homeowners insurance claim for injuries the victim suffers.
Check Out: Why Do Home Insurance Companies Deny Claims?
Business liabilities
Running a home business doesn’t mean your personal liability insurance protects your business. If a client sues you for bad advice, liability coverage won’t cover your legal fees or court awards. It also wouldn’t cover any injuries that occur in your home related to your business.
Only business insurance would provide financial help for legal issues involving your business.
Automobile accidents
Car accidents don’t fall under your personal liability insurance. Your automobile liability insurance would cover injuries and damages you cause while driving.
How much does personal liability insurance cost?
Personal liability coverage is part of your homeowners policy. It’s typically the least expensive section of a home insurance policy. The average price for an HO-3 home insurance policy is $1,319 per year, or $109.92 per month, according to the National Association of Insurance Commissioners (NAIC).[2]
The cost of your personal liability section will vary depending on the coverage limit you select and where you live. Raising your coverage limit may not drastically raise your monthly insurance premiums. For example, your costs may not jump too much if you increase your liability coverage from $100,000 to $300,000.
How much personal liability coverage is necessary?
Homeowners liability limits generally start at about $100,000, but coverage limits commonly range from $100,000 to $500,000.[3] There’s no right amount of personal liability coverage to purchase, as the answer varies depending on your situation.
Factors that should go into your decision on how much coverage to carry include:
Certain risk factors may increase your likelihood of being sued. You may consider increasing your liability protection if you:
Own a swimming pool
Have a trampoline in your backyard
Frequently set off fireworks on your property
Own an older home in need of repairs
Live in a cold climate
Have a long commute
Frequently host people in your home
Ideally, you should have enough coverage to insure everything that you own. You’re financially responsible for liability costs that exceed your coverage limits.
Learn More: Attractive Nuisance: What It Is and Why You Should Care
Should you get a personal umbrella insurance policy?
If you have significant assets with a value that exceeds your available liability coverage, you may want to consider purchasing an umbrella policy.
“A personal umbrella insurance policy provides an extra layer of coverage for named insured and resident household members over and above your standard homeowners and auto insurance policies,” says Arnold. “The personal umbrella coverage offers additional limits of protection for you in the event of potentially devastating liability claims or judgments against you, i.e., a catastrophic event resulting in bodily injury or property damage for which you are legally liable.”
You should consider adding personal umbrella coverage if:
Your net worth exceeds the available liability limits
You frequently travel outside the U.S.
You frequently host events and groups in your home
You coach kids’ sports
You own a dog
“The limits of coverage typically offered start at $1,000,000 and can go up to $5,000,000,” Arnold says.
Learn More: How Much Does an Umbrella Policy Cost?
Should renters have personal liability insurance?
Personal liability coverage is typically part of standard renters insurance policies, too. Renters insurance is generally not required by law. However, your landlord or rental management company may not let you sign a lease until you can prove you have renters insurance with liability coverage.
Your landlord’s insurance doesn’t protect you against liability if you’re responsible for someone else’s injury or property damage.
Read More: How Much Renters Insurance Do I Need?
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