Personal Liability Coverage

Fact-checked with HomeInsurance.com

1

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

Personal liability insurance protects you against accidents that happen to others at your home or apartment. Regardless of whether you rent or own, the personal liability insurance cost is well worth it.

What is personal liability insurance?

Personal liability insurance covers homeowners or renters if they are at fault for property damage or bodily injury that occurs on their property or beyond it.

What does personal liability insurance cover?

After you pay the deductible amount you’re responsible for, your insurance policy pays legal costs if you’re sued, expenses for property damage caused by you or members of your family or medical expenses for injuries that happen on your property.

Your homeowners policy coverage won’t be applicable in every situation. For instance, if you harm another person or damage property intentionally, you won’t be covered by your home insurance policy. You won’t be covered for damages from libel and slander unless you have an umbrella insurance policy. You also won’t be covered for car accidents or other incidents involving your car, which should be covered by your auto policy.

How much coverage do you need?

Most standard homeowners policies include $100,000 to $300,000 in personal liability coverage. It may be hard to imagine exhausting your homeowner’s insurance standard policy limit of up to $300,000. But if, for example, your child accidentally burns someone else’s house down, you could be liable for a lot more than $300,000 in property damage and personal injury claims. In such a situation, a lawsuit could wipe out your entire net worth including your savings, your home’s equity and your assets.

To come up with the right amount of personal liability coverage, consider your future earnings, whether you own multiple residences and if you have teenagers, who may be higher-risk for damages. Depending upon the assets you want to protect, it can be beneficial to consider adding excess liability or umbrella insurance coverage.

When in doubt, contact your insurance broker to evaluate coverages in your homeowners or renters policy. Read the fine print in any quote to ensure you’re getting the personal liability coverage you want.

How much does personal liability insurance cost?

According to the National Association of Insurance Commissioners (NAIC), the average annual cost for a homeowners insurance policy is $1,192. A portion of that cost pays for your 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. According to the Insurance Information Institute, Florida had the highest average homeowners insurance premium at $1,993 in 2015, and Oregon had the lowest at $643.

Who needs personal liability coverage?

If you’re responsible for your living expenses or have assets such as a home, savings or investments, you should have some form of personal liability insurance to protect yourself financially. To determine coverage amounts, deductibles, and limits, add up your net worth and the value of your assets. Homeowners insurance personal liability coverage limits range from $100,000 to $300,000. If you have a high net worth and more assets, consider increasing your personal liability coverage.

Benefits of personal liability insurance

If you’re sued for property damage or personal injury in your home or away from it, your personal injury coverage can help you pay for legal counsel to represent you, litigation cost or settlement costs.

In a lawsuit, the other side will be looking for money. Attempting to seize your house or assets is one way to collect if they win in court. Your personal insurance policy helps to protect your assets and your net worth.

Having personal liability insurance coverage helps limit out-of-pocket expenditure if you’re at fault for an accident, property damage or personal injury.

How to get personal liability insurance

If you have a homeowners insurance policy or a renters policy, check your personal liability coverages and limits. As your net worth or the worth of your home and belongings increase, contact your insurance broker to make sure that you have adequate coverage in place. You can also add personal liability insurance to your auto policy or purchase a stand-alone personal liability policy.

FAQS

What is personal liability?

Personal liability insurance protects you financially if you or a family member is responsible for someone’s injuries or property damage. Auto insurance, renters insurance and homeowners insurance contain personal liability coverage in the policies.

Do I need personal liability insurance?

If you have assets you’d like to protect, the personal liability insurance cost is well worth it. If someone is hurt in your home, your dog bites a guest or you’re in an accident, personal liability insurance covers the cost of the medical bills, their damaged items, legal fees and court judgments. If you didn’t have personal liability coverage, you could lose your home or other assets to pay for the costs.

How much is personal liability insurance?

There are many factors that determine personal liability insurance costs. Some of the main factors on who much personal liability insurance costs include where you live, the amount of coverage you need, the size of your deductible and history of claims. It’s best to shop around and compare insurance quotes carefully to find the best (and most affordable policy).