What is personal liability coverage on homeowners insurance

Accidents happen, and as a homeowner, you, your children or your pets can be held responsible for injuries to people in or outside your home or damage to other people’s property. The good news is your policy can give you financial protection against covered liability claims.

What Personal Liability Insurance Covers

Your homeowners insurance provides both property and liability protection. Property insurance protects the structure of your home (dwelling coverage) and your belongings (personal property coverage). And personal liability coverage protects you if you’re legally responsible for damage to someone’s property, or if you accidentally injure someone whether you’re at home or away from it.

How exactly does personal liability insurance protect you? Let’s break it down.

Injury on Your Property

If someone is injured on your property, your personal liability insurance helps pay for their medical bills and other potential costs. For example, if the injury resulted from your neglect — like failing to repair a broken banister — you may even be sued. And if you’re found liable, liability coverage within your homeowners policy may help protect your finances if legal expenses result.

Negligent Acts of Children and Others

Let’s say your children are kicking a soccer ball in the yard and they accidentally kick it through your neighbor’s window. Fortunately, even though it wasn’t your own home that was damaged, if accidental damage occurs to someone else’s property by a member of your household, the liability portion of your homeowners insurance helps provide protection against associated costs from the accident.

Dog Bites

Whether out walking Fido or playing in your yard, the liability portion of your homeowners insurance policy will typically help provide protection if your dog bites a person or another animal. Keep in mind, not all dogs will meet the criteria to be included under your policy. Connect with your agent to check if your dog is eligible and learn more about the limits of the liability coverage. Here’s a closer look at homeowners insurance and dogs.

What Personal Liability Insurance Doesn’t Cover

Though it’s important to know the many ways in which personal liability insurance protects you, it’s also important to understand what it doesn’t cover.

This coverage is designed to protect you if you accidentally injure or damage the property of a guest, neighbor or anyone who isn’t a member of your household. And it’s not an alternative or supplement to your health insurance. For instance, if you or a family member are injured in your home, your personal liability coverage won’t cover resulting medical bills — that’s what your health insurance is for.

Also, if you or a family member intentionally cause harm to someone, you won’t be able to depend on your personal liability coverage for financial protection.

Home Insurance Liability Coverage Amounts

Like any coverage, your personal liability coverage offers protection up to your policy limit, which is the capped amount your insurance company pays in the event of a claim. You’ll choose your coverage limit when creating your policy, and any expense that extends beyond your limit will come out of your pocket. The good news is you can increase your coverage.

For extra protection and added peace of mind, umbrella insurance provides an additional layer of liability coverage above your policy limit, so you won’t have to dig into your own savings in the event of a substantial claim.

For example, we mentioned that personal liability coverage helps cover you if your dog injures someone — which is an important protection to have in place. But a dog bite claim can often surpass your personal liability coverage limit. Having umbrella insurance provides an additional layer of protection should a claim exceed the liability limits you selected within your homeowners policy and helps protect you assets.

Remember, costs can vary depending on the amount of coverage you’re looking for. That’s why your best bet is to connect with your American Family agent to discuss policy amounts and limits — they’ll help customize your policy to ensure you have the right limits for your unique needs.

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Your homeowners insurance policy contains several different types of insurance coverage. Personal liability coverage, which protects you financially against accidents that happen to others at your home or apartment, is typically one of the coverage types.

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Key takeaways

• Personal liability helps cover the legal costs of lawsuits brought against you for damage caused to others by you or members of your household.
• Personal liability is often included as standard on homeowners insurance policies, but you may also be able to purchase it as a standalone policy.
• This type of personal liability insurance does not extend coverage to car accidents or business or commercial claims.

What is personal liability insurance?

Most homeowners insurance companies and condo and renters insurance companies include personal liability coverage as a standard coverage type on property policies. This coverage is sometimes referred to as “coverage E.” Personal liability coverage provides financial protection if you are found at fault or negligent for bodily injury caused to others or for damage to the property of others that occurs on your premises.

For example, if you have a party and a guest trips on your rug and breaks an arm, your liability coverage would apply if you were found at fault for the guest’s injuries. The guest may also receive compensation for medical expenses, lost wages or pain and suffering from your personal liability coverage. The key is that you must be negligent for the incident for personal liability to apply. Most home insurance policies also include medical payments coverage, which pays up to the policy limit for injuries regardless of negligence.

Personal liability coverage is purchased in dollar amounts, usually from $100,000 to $500,000. If you feel that you need additional coverage, you can increase your personal liability coverage limit by purchasing an umbrella policy from your insurance company. Generally, you’ll be required to carry a certain liability limit on your underlying policies. Once that limit is used up during a claim, your umbrella policy will kick in for protection up to the policy limit.

What does personal liability insurance cover?

Incidents covered by personal liability may include, but are not limited to, the following scenarios:

• Guest injures themselves on your premises
• Your dog bites a guest or passerby (some companies exclude liability coverage for certain dog breeds or dogs with a history of aggressive behavior)
• Damage to a guest’s property occurs in certain circumstances
• Injuries or deaths occur on your premises, such as incidents related to the use of a pool or trampoline (some companies place specific restrictions on coverage for these items)
• Someone slips and falls on your icy driveway or sidewalk and is injured

It is important to note that you must typically be found negligent for injuries or damage for personal liability coverage from your property insurance policy to apply. For example, suppose a tree on your property falls during a windstorm and damages your neighbor’s garage. In that case, your liability insurance will likely only pay for their damages if you are found negligent for them. In other words, it would have to be proven that you knew the tree was dead or dying and could cause damage to your neighbor’s property. Otherwise, the cost of repairs would be covered under your neighbor’s policy and designated as wind damage or some other cause of loss.

Liability coverage may also apply away from your home’s location. If your dog gets loose on a walk and knocks someone to the ground, injuring them, your liability coverage may still cover you even though you were not at home.

How to get personal liability insurance

If you have an active homeowners insurance policy or a renters policy, check your personal liability coverage and limits. As your net worth or the worth of your home and belongings increase, contact your insurance agent to make sure that you have adequate coverage in place in the event of personal liability claims.

To receive personal liability insurance coverage, you can either:

1. Have a homeowners insurance policy. Standard homeowners, condominium and renters insurance policies come with a certain amount of personal liability insurance. The policy limits can be increased in specific increments.
2. Have a standalone personal liability policy. If you do not have a property insurance policy but still want personal liability coverage, you may be able to purchase a standalone comprehensive personal liability (CPL) insurance policy.

How much coverage do you need?

Most standard homeowners policies offer $100,000 to $500,000 in personal liability coverage. It may be hard to imagine exhausting your homeowner’s insurance liability limit, but costs can add up quickly if someone is injured. Your liability coverage also financially protects you in other ways. For example, if your child accidentally burns someone else’s house down, you could be liable for a substantial amount 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 determine the right amount of personal liability coverage for your needs, consider your situation and speak with a licensed insurance agent to understand what liability coverage may be best for your situation. Depending upon the assets you want to protect, it can be beneficial to consider adding excess liability or umbrella insurance coverage.

How much does personal liability insurance cost?

The average cost of a homeowners insurance policy in the U.S. is $1,383 per year for a policy with a dwelling amount of $250,000, based on a homeowner with $300,000 in 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. For example, you will generally pay more for a policy with $500,000 in liability coverage than a policy with $100,000 in liability coverage.

Learn more: Affordable home insurance companies

Who needs personal liability coverage?

If you are responsible for your living expenses or have assets such as a home, savings or investments, you might want to consider adding some form of personal liability insurance to protect yourself financially. To help determine coverage amounts, add up your net worth and the value of your assets. Homeowners insurance personal liability coverage limits typically range from $100,000 to $500,000. If you have a high net worth and more assets, consider increasing your personal liability coverage or purchasing an umbrella policy.

Benefits of personal liability insurance

Liability insurance is designed to help protect your finances if you are found negligent for injuries or damage to the property of others. Medical bills can add up, but when you add on the cost of legal representation, pain and suffering, and lost wages, the costs can increase even faster. Liability coverage is a layer of protection to help safeguard your finances from that fallout. Some benefits of this financial protection include:

• Paying for legal costs: Personal liability could help pay for legal counsel to represent you, litigation or settlement costs.
• Extending coverage for everyone in your home: This includes family members and any pets or animals kept in the home unless specifically excluded.
• Acting as a financial buffer: Without this coverage, your out-of-pocket expenses could add up quickly. Your savings, house, vehicles and other assets could be at risk if you do not have the coverage to compensate the injured or damaged party adequately.