What Is Personal Liability Insurance?
No matter how cautious you are, accidents happen and can be very costly. Personal liability insurance is the part of your home insurance policy that steps in when you're accused of causing someone else bodily harm or property loss. It can help pay for things like:
- The injured party's medical bills
- Repair costs for the person's damaged property
- Your legal expenses if the claim escalates into a lawsuit
So say, for example, your neighbor stops by to bring your mail that accidentally got delivered to their house. Let's also imagine it is raining hard that day, and unfortunately, your neighbor takes a nasty spill on your porch. Your poor neighbor ends up in the hospital after badly hurting their neck and back. They want you to pay $300,000 in damages accrued from missed work, surgery, and follow-up doctor visits.
If you didn't have personal liability insurance to cover this massive cost, you might have to sell your house (and other assets) to settle the debt. But if you have at least $300,000 in personal liability insurance, you can make things right with your neighbor and not sell your property or deplete your savings.
Think it won't happen to you? Consider this: according the National Safety Council (NSC), one in 16 people experienced an accidental injury in the home that necessitated medical attention.
When Do I Need Personal Liability Coverage?
As a homeowner, your house is a major asset. It may be the biggest purchase you make your whole life. That also means if you have a home, you could lose it in a lawsuit.
You need liability coverage if:
- You're a homeowner
- You regularly host parties or have guests over
- You have a pool or trampoline
- You volunteer / work with the community
In some cases, it may even make sense for you to add extra liability protection by way of an umbrella policy. This is a cost-effective way to drastically increase your liability coverage.