Personal liability coverage

Your homeowners insurance policy contains several different types of insurance coverage. Personal liability coverage, which protects you financially against accidents that happen to others at your home or apartment, is typically one of the coverage types.

What is personal liability insurance?

Most homeowners insurance companies and condo and renters insurance companies include personal liability coverage as a standard coverage type on property policies. This coverage is sometimes referred to as “coverage E.” Personal liability coverage provides financial protection if you are found at fault or negligent for bodily injury caused to others or for damage to the property of others that occurs on your home’s premises.

For example, if you have a party and a guest trips on your rug and breaks an arm, your liability coverage would apply if you were found at fault for the guest’s injuries. The guest may also receive compensation for medical expenses, lost wages or pain and suffering from your personal liability coverage. The key is that you must be negligent for the incident for personal liability to apply. Most home insurance policies also include medical payments coverage, which pays up to the policy limit for injuries regardless of negligence.

Personal liability coverage is purchased in dollar amounts, usually from $100,000 to $500,000. If you feel that you need additional coverage, you can increase your personal liability coverage limit by purchasing an umbrella policy from your insurance company. Generally, you’ll be required to carry a certain liability limit on your underlying policies. Once that limit is used up during a claim, your umbrella policy will kick in for protection up to the policy limit.

What does personal liability insurance cover?

Incidents covered by personal liability may include, but are not limited to, the following scenarios:

• Guest injures themselves on your premises
• Your dog bites a guest or passerby (some companies exclude liability coverage for certain dog breeds or dogs with a history of aggressive behavior)
• Damage to a guest’s property occurs in certain circumstances
• Injuries or deaths occur on your premises, such as incidents related to the use of a pool or trampoline (some companies place specific restrictions on coverage for these items)
• Someone slips and falls on your icy driveway or sidewalk and is injured

It is important to note that you must typically be found negligent for injuries or damage for personal liability coverage from your property insurance policy to apply. For example, suppose a tree on your property falls during a windstorm and damages your neighbor’s garage. In that case, your liability insurance will likely only pay for their damages if you are found negligent for them. In other words, it would have to be proven that you knew the tree was dead or dying and could cause damage to your neighbor’s property. Otherwise, the cost of repairs would be covered under your neighbor’s policy and designated as wind damage or some other cause of loss.

Liability coverage may also apply away from your home’s location. If your dog gets loose on a walk and knocks someone to the ground, injuring them, your liability coverage may still cover you even though you were not at home.

How to get personal liability insurance

If you have an active homeowners insurance policy or a renters policy, check your personal liability coverage and limits. As your net worth or the worth of your home and belongings increase, contact your insurance agent to make sure that you have adequate coverage in place in the event of personal liability claims.

To receive personal liability insurance coverage, you can either:

1. Have a homeowners insurance policy. Standard homeowners, condominium and renters insurance policies come with a certain amount of personal liability insurance. The policy limits can be increased in specific increments.
2. Have a standalone personal liability policy. If you do not have a property insurance policy but still want personal liability coverage, you may be able to purchase a standalone comprehensive personal liability (CPL) insurance policy.

How much coverage do you need?

Most standard homeowners policies offer $100,000 to $500,000 in personal liability coverage. It may be hard to imagine exhausting your homeowner’s insurance liability limit, but costs can add up quickly if someone is injured. Your liability coverage also financially protects you in other ways. For example, if your child accidentally burns someone else’s house down, you could be liable for a substantial amount in property damage and personal injury claims. In such a situation, a lawsuit could wipe you out financially, including your savings, your home’s equity and your assets.

To determine the right amount of personal liability coverage for your needs, consider your situation and speak with a licensed insurance agent to understand what liability coverage may be best for your situation. Depending upon the assets you want to protect, it can be beneficial to consider adding excess liability or umbrella insurance coverage.

How much does personal liability insurance cost?

The average cost of a homeowners insurance policy in the U.S. is $1,428 per year for a policy with a dwelling amount of $250,000, based on a homeowner with $300,000 in personal liability coverage. The amount and percentage that pays for the personal liability coverage portion of your policy depends on your coverage limits and where you live. For example, you will generally pay more for a policy with $500,000 in liability coverage than a policy with $100,000 in liability coverage.

Learn more: Affordable home insurance companies

Who needs personal liability coverage?

If you are responsible for your living expenses or have assets such as a home, savings or investments, you might want to consider adding some form of personal liability insurance to protect yourself financially. To help determine coverage amounts, add up your net worth and the value of your assets. Homeowners insurance personal liability coverage limits typically range from $100,000 to $500,000. If you have a high net worth and more assets, consider increasing your personal liability coverage or purchasing an umbrella policy.

Benefits of personal liability insurance

Liability insurance is designed to help protect your finances if you are found negligent for injuries or damage to the property of others. Medical bills can add up, but when you add on the cost of legal representation, pain and suffering, and lost wages, the costs can increase even faster. Liability coverage is a layer of protection to help safeguard your finances from that fallout. Some benefits of this financial protection include:

• Paying for legal costs: Personal liability could help pay for legal counsel to represent you, litigation or settlement costs.
• Extending coverage for everyone in your home: This includes family members and any pets or animals kept in the home unless specifically excluded.
• Acting as a financial buffer: Without this coverage, your out-of-pocket expenses could add up quickly. Your savings, house, vehicles and other assets could be at risk if you do not have the coverage to compensate the injured or damaged party adequately.

Frequently asked questions

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    How are personal liability and personal injury coverage different?

    Personal liability coverage will pay if you cause injury to someone else or property damage to others. Personal injury coverage provides coverage if you are sued for libel, slander or invading someone’s privacy. It also provides coverage if you are falsely arrested or imprisoned, are a victim of malicious prosecution or wrongfully evicted. Depending on your insurance company, personal injury coverage may be included in the personal liability coverage or you may have to add an endorsement to your homeowners insurance.
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    Do you have to pay a deductible for personal liability claims?

    No, you do not have to pay a deductible for personal liability claims. Other homeowners insurance claims may require a deductible. For instance, if you cause a fire that damages your home, you would pay a deductible for your dwelling coverage. However, if that same fire also caused injury to someone, there is no deductible for your personal liability coverage going into effect after being found responsible or if you’re sued.