What is personal liability insurance coverage?

What is personal liability coverage?

Personal liability coverage pays when you are legally responsible for causing bodily injury or property damage. It applies when unsafe conditions, your actions, or a household member's actions result in a loss. It also includes legal defense, meaning the insurer provides and pays for an attorney if you are sued for a covered claim.

A claim can be made against your homeowners liability coverage for the cost of medical bills after an injury or for someone else’s property that is damaged due to something you did or failed to do that could have prevented it. It covers you everywhere, not just at home.

"Most insurance carriers provide coverage with worldwide protection in case a claim or lawsuit is brought against you because of accidental bodily injury or property damage," Scott Hammersand, a personal lines risk advisor with Overmeyer Hall Associates, an insurance broker in Ohio, says.

For liability insurance to apply, you have to be at fault for the injury or damage. It will also cover you if you’re vicariously at fault, such as when a dog bites someone or a child breaks something.

Check how personal liability coverage limits affect your home insurance rates with our home insurance calculator.

What does personal liability insurance cover?

Personal liability insurance covers damages when an insured person is legally responsible for another person’s bodily injury or property damage. It also pays legal defense costs when you must defend yourself in court over a liability claim. All payments are subject to the policy’s limits, conditions, endorsements, and exclusions.

Coverage can include:

Injuries to another person, either on your property or anywhere, if you or a family member living with you is at fault.
Injuries caused by a covered family pet.
Damage to the property of others, either on your property or anywhere, if you or a family member is at fault.
Costs to defend a lawsuit against you, regardless of whether or not you are at fault.

As mentioned above, liability coverage extends not only to you but also to your family. If your child is playing baseball and breaks a neighbor’s window, it’s covered. Liability also covers injuries caused by a pet, with some exceptions. Home insurance policies usually exclude many exotic pets and some dog breeds.

What doesn’t personal liability insurance cover?

Personal liability insurance does not cover all types of injuries or property damage. Common exclusions include intentional acts, injuries to household members, business activities, and most motor vehicle-related liability.

These are the common exclusions of liability coverage:

Intentional injuries or damage.
Injuries to you or members of your household.
Damage to property belonging to you or members of your household.
Business pursuits either on or off the premises.

Liability coverage only applies to other people. "Accidentally damaging your own property or injuring yourself or family would not be covered," Hammersand says.

Remember that liability insurance doesn’t cover anything where you are not at fault. A person making a claim against you will need to show that you were negligent and caused the injury or damage.

How much personal liability coverage do I need?

You need enough liability coverage to protect all of your assets from a lawsuit. The standard personal liability coverage limit on a homeowners policy is $100,000, but experts recommend raising it to at least $300,000. You might need more coverage if you have many assets to protect or face out-of-the-ordinary risks.

"The average person should have at least $500,000 of personal liability on their home, condo, or renters policy. It’s relatively inexpensive to raise this limit from the standard $100,000," Hammersand says.

Consider a higher limit if you:

Have substantial home equity, savings or investments
Own rental property
Have a swimming pool or trampoline
Own a dog or other pets
Entertain guests frequently
Employ household workers
Participate in activities that increase your liability exposure (like coaching, hosting events, or certain hobbies)

If you need more coverage than a home insurance policy can provide, consider an umbrella insurance policy. This type of policy will cover you above and beyond the limits of your home insurance and starts at $1 million.

"Many lawsuit awards result in the garnishment of future earnings as punishment for prior negligence. That means you could be paying for an accident you are considered responsible for over years of income in the future. The only way to protect yourself is to buy enough insurance to ensure such risk is minimal, if not almost impossible," Martin says.

How much is personal liability insurance?

Personal liability coverage is included in the full cost of a homeowners, renters or condo policy, so it does not have a separate standard price. Increasing the limit is often inexpensive. Insurance.com data show that raising homeowners liability coverage from $100,000 to $300,000 costs $14 to $16 more per year, on average.

Your actual cost depends on:

Insurance company
State and ZIP code
Coverage limit
Claims history
Household risks
Policy discounts
Property characteristics

Ask for quotes at $100,000, $300,000, and $500,000 to see the exact difference.

FAQ: Personal liability insurance

How does homeowners insurance work if someone gets hurt on your property?

There are two ways homeowners insurance can cover injuries to someone on your property. Regardless of fault, your medical payments coverage will cover medical bills for a minor injury. If the injury is more severe, and your negligence caused it, your liability insurance will cover medical bills and any resulting legal procedures.

Does liability home insurance cover medical expenses?

Yes. Personal liability pays another person’s medical costs when you’re legally responsible for an injury. It doesn’t cover your medical expenses or those of your household members.

When is liability coverage included in a homeowners policy?

Always. All HO-3 standard home insurance policies include liability.

Does personal liability insurance cover dog bites?

Yes, in most cases, personal liability insurance covers dog bites if you are legally responsible. However, some insurers exclude certain breeds and dogs with a history of biting, and coverage can vary by policy and state. Always check your policy for details.