Personal liability insurance provides financial protection when you or a covered household member is legally responsible for an accident in your home (or potentially elsewhere) that injures someone or damages their property. It can help pay for medical bills, property repairs or replacements, and your legal defense and settlements if someone sues you after the incident.
Though you can purchase stand-alone personal liability insurance coverage, it is typically part of a standard home insurance policy, often appearing as Coverage E or Coverage L in your policy documents. The amount of coverage you need depends on several factors, such as the value of your assets (including your house) and specific property risks.
How does personal liability coverage work?
Personal liability insurance protects you from paying substantial out-of-pocket expenses, up to your policy limits, if you or a covered household member is found responsible for a third party’s bodily injuries or property damage.
For example, say a visitor in your home falls down your steps because of a wobbly handrail. Personal liability coverage can help pay for the visitor’s medical expenses, such as those for doctor appointments and X-rays. It can even cover their lost wages should their injury prevent them from working.
Similarly, suppose your child throws a baseball through the neighbor’s window, damaging their entertainment system. Your coverage can help pay to repair or replace the damaged property.
After a covered event, you can contact your insurer to begin the personal liability claims process, much like you would for other issues covered by home insurance. However, keep in mind that liability claims typically do not carry deductibles, so you won’t have out-of-pocket expenses unless the associated costs exceed your policy limit.
What does personal liability insurance cover?
The personal liability coverage included with your home insurance policy may cover the following, up to your coverage limits:
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Medical bills for the injured party, including ambulance rides, hospital stays, medications, surgeries, and any rehabilitation services the individual may need due to a covered accident for which you or a covered household member is responsible.
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Property damage, specifically the cost to repair or replace damaged items if you or a covered household member is at fault for the damage, on or off your property.
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Lawsuits and legal expenses, including your defense and any settlements or judgments if the victim sues you after the incident.
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Lost wages for the injured party if their injuries prevent them from carrying out their occupational obligations.
What does personal liability insurance not cover?
Personal liability insurance typically won’t pay for the following:
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Intentional injuries
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Intentional property damage
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Injuries to covered parties, such as members of your household
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Damage to your property
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Damage or injuries caused by car accidents
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Business claims
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Claims related to certain excluded dog breeds, if applicable
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Liable, slander, or defamation
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Any other issues excluded from coverage based on your policy agreement
Do I need personal liability insurance?
Like many types of insurance, the value of personal liability coverage is often only apparent when you need it, so it’s a good idea to have it in place now. Personal liability insurance is generally recommended, especially in the following scenarios:
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You own a home. Your home is an extremely valuable asset – possibly the most expensive you’ll ever own. Personal liability insurance can provide financial protection if you’re sued after a covered incident.
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You have a high-risk property. Some features, like a pool, pond, or trampoline, increase the risk of an injured third party and a lawsuit. If your property presents a higher risk of injury, coverage is essential. However, always verify that your policy covers those items, as some may exclude certain risks, like diving boards, from coverage.
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You own a dog. If your dog ever bites someone, personal liability insurance can cover the injured party’s medical bills and other costs arising from the claim. Note that some insurers exclude certain breeds from coverage, so make sure your policy covers your pet.
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You often entertain guests. If you frequently host parties or have folks at your home, the odds of someone getting injured on your property increase, as does the importance of coverage.
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You are a public figure and/or have a high net worth. If you are wealthy and/or well-known in your community, you could become the target of lawsuits. Consider increasing your personal liability coverage to protect your assets.
How much personal liability insurance do I need?
You should have enough personal liability coverage to protect your assets after a claim. Most experts recommend that your home insurance policy include at least $300,000 in personal liability coverage.
However, if you have a high net worth or high-risk features on your property, such as a swimming pool, consider a higher coverage amount, as you may have a higher risk of a claim or subsequent lawsuits. If you aren’t sure how much coverage you need, speak with an insurance agent.
Tip: Insurers often set maximum limits for home insurance liability policies. Consider purchasing umbrella insurance if your coverage needs exceed the available policy limits. An umbrella policy can help you cover costs if an incident exceeds the liability limits of your home or auto insurance policy.
Do you have enough coverage? Here’s how much home insurance you need
