Personal liability insurance is designed to cover your financial responsibilities if you’re found liable for another person’s injuries or property damage. It can help pay their medical bills or property repairs and your legal fees.
What is personal liability insurance coverage?
Personal liability insurance is included in standard homeowners insurance policies. It’s considered “third-party coverage,” meaning it is designed to reimburse others if you (or a member of your household) injures someone else or damages their property. This differs from first-party coverage, which is designed to reimburse you.
For example, if your child accidentally hits a baseball through your neighbor’s kitchen window, the repair costs should be covered by personal liability insurance.
Personal liability insurance policy limit
It’s important to note that home insurance policies have a limit of liability, which is the highest amount your insurance company will pay if you have a covered claim. A $100,000 limit is standard, but increasing it is surprisingly cheap and often recommended. If the claim exceeds the limit of liability, you would typically have to pay the difference out of pocket.
What does personal liability insurance cover?
Personal liability insurance usually applies anywhere in the world, not just at your house. If you’re responsible for another person’s injuries while on vacation in Mexico, for example, you would likely be covered.
Here are several other examples of situations that would typically be covered by personal liability insurance:
- Dog bites: If your dog bites someone at a dog park and they have to seek medical treatment, your liability insurance would likely cover their medical bills. However, some home insurance policies have dog breed restrictions, so check your policy for exclusions.
- Slip-and-fall accidents at your home: Personal liability insurance might cover a delivery driver’s injuries, rehabilitation, and lost wages if they slipped on your snowy walkway and broke their ankle while delivering a package.
- Accidental property damage: Imagine your child is chipping golf balls in your backyard, but a stray ball dents your neighbor’s garage door. In this case, your personal liability insurance could help pay to repair it.
- Legal defense: If you are sued for a covered injury or property damage, your policy will pay for your lawyer and court costs. These legal fees are usually paid in addition to your policy limit, so your full limit is still available to pay for the actual injuries or damages the other person suffered.
Personal liability coverage vs. medical payments coverage
Personal liability coverage for homeowners differs from medical payments or MedPay, which is also included with basic home insurance policies. MedPay provides a small amount of coverage for a guest’s medical bills if they get injured at your home, regardless of who was at fault. It’s designed as a quick fix to cover cheaper medical bills and avoid lawsuits.
What is not covered by personal liability insurance?
Liability insurance doesn’t cover everything. Here are some common personal liability coverage exclusions:
- Intentional injuries or property damage
- Claims related to home-based businesses
- Injuries to you or other people living in your household
- Damage caused by your vehicle
- Damage to your home or personal property
- Damage caused by what you say or write (libel and slander)
How much personal liability coverage do I need?
Most standard homeowners insurance policies include at least $100,000 in personal liability insurance coverage, according to the Insurance Information Institute. However, that’s not necessarily enough coverage for every homeowner or legal situation.
To choose the right amount of liability insurance, tally up your personal assets that could be at risk if you were sued for bodily injury or property damage. This includes savings accounts, home equity, investments, real estate, and vehicles. Ideally, your liability insurance coverage limit should match or exceed the value of your assets.
If you have a high net worth, you might also consider buying umbrella insurance, which extends your limit of liability beyond what a standard policy provides.
Does personal liability insurance have a deductible?
Unlike the coverage for your house or belongings, personal liability insurance typically has no deductible. If you are held responsible for someone’s injury or damaged property, your insurer pays for legal fees and settlements from the very first dollar. You don’t have to pay anything out of pocket or hit a certain dollar amount before your insurance company starts helping.
This differs significantly from dwelling or personal property claims, where a deductible always applies. For instance, if a $5,000 fire claim has a $1,000 deductible, you would receive a check for $4,000. With liability coverage, because there is no deductible to subtract, your full policy limit is available immediately.
Frequently asked questions
What personal liability coverage for renters?
Personal liability insurance for renters is included with standard HO-4 renters insurance policies. It’s very similar to homeowners liability insurance, with a few key differences, given that renters don’t own the physical building they live in.
Renters liability insurance covers accidental injuries and property damage when you’re at fault, like if your dog bites a neighbor or you cause a kitchen fire that spreads to the unit next door.
Liability insurance for renters is important because your landlord’s insurance won’t cover your expenses if you’re responsible for bodily injuries or property damage. Landlord insurance only covers the building owner’s fees if a tenant or visitor gets hurt on the property and the landlord is determined to be responsible.
Does personal liability cover dog bites?
Yes, most personal liability insurance policies cover dog bites. If your dog bites another person, either at your home or somewhere else, your policy can help pay for their medical expenses, up to the limit of liability. If you get sued, it will also pay for your lawyer fees, court costs, and a settlement or judgment with the person who got bit.
However, some insurance companies exclude specific dog breeds or only cover dogs that haven’t bitten in the past. If you have a dog, check your home insurance policy documents to make sure that their breed isn’t restricted. Otherwise, dog bite claims may not be covered.
Is personal liability the same as bodily injury?
Not quite. It’s better to think of personal liability as the whole umbrella and bodily injury as just one thing underneath it. While bodily injury covers medical bills if someone gets hurt on your property, personal liability is a broader package. It also covers property damage (like if you accidentally break a neighbor's expensive window) and legal fees if you end up in court.
In short, your homeowners policy uses personal liability as a catch-all to protect you from the financial fallout of accidents, whether they involve a person's physical injuries or their belongings.
What is the difference between personal liability and medical payments?
Personal liability insurance is a component of home insurance that compensates another person for their injuries or property damage if you’re determined to be at fault. It typically applies to claims that occur anywhere in the world.
Medical payments insurance provides a small amount of coverage for someone else’s medical expenses if they get injured on your property. Fault does not matter; therefore, payouts can typically be distributed faster and lawsuits can potentially be avoided.
Personal liability insurance has much higher policy limits and is intended to cover larger legal settlements, rather than small medical bills.
