What is personal liability insurance?
While many people are familiar with standard homeowners and renters insurance policies, they may be less aware of liability insurance. These landlords and renters might be surprised to learn that in many cases liability insurance is part of their policies. Simply put, liability insurance protects you and your property if you are held liable for another person’s injury or damage to their personal property.
Liability insurance is part of most homeowners and renters insurance policies and may be referred to as “Cover E”. It is designed to provide coverage in the event that you are found liable for property damage or bodily injury to others. Whether a guest is injured due to your negligence, you accidentally cause damage to someone else’s home or personal property, or another person listed on your policy unintentionally injures another person, the personal liability helps cover legal fees, medical bills and repair costs.
Although personal liability is an integral part of home and tenant insurance policies, it has its limits. Most policies cap coverage at $500,000 or less. People who want additional coverage can take out umbrella insurance. Umbrella policies are designed to take effect once you have purchased your liability insurance. Coverage often starts at $1 million and can go up to $10 million or more.
It is important that landlords and tenants have a clear idea of what their personal liability insurance covers up to the limits of their policy. Here are specific examples where personal liability insurance comes into play:
- Court fees and court costs whether you are found responsible or not
- Medical bills that are the result of bodily injury to others that occurs in your home. This can include injuries caused by your negligence, for example if you fail to repair a known tripping hazard on a staircase.
- Lost salary until the injured person is able to return to work.
- pain and suffering lawsuits due to injuries in your home can drain your bank accounts, but liability insurance can help cover the cost of a settlement if you are found legally liable.
- Death benefits if someone suffers a fatal injury on your property, such as funeral or burial expenses.
What does personal liability insurance not cover?
Before purchasing home or renters insurance policies, be sure to read the fine print carefully to determine what the insurer excludes from coverage. Although it may vary from policy to policy, standard exclusions include the following:
- At-fault road accidents, which are generally covered by your car Assurance.
- Injury to yourself or household memberswhich are generally covered by health insurance.
- Damage or injury you intentionally cause
- Claims for injury or damage related to your work or driving business away from home.
The purpose of personal liability insurance is to protect your net worth in the event of a lawsuit, so you’ll want a coverage amount that reflects the value of your assets. Assets can include real estate, vehicles, bank accounts, investments, and valuables, such as jewelry, artwork, furniture, and electronics. Experts recommend taking an inventory of your belongings and assets to make an informed decision on how much liability coverage you need.
Let’s say you have $100,000 in personal liability insurance, but your assets total $250,000. If someone sues you for injuries or damage to your or their property for $225,000 and the judge rules in their favor, you will have to pay the additional $125,000 out of your own pocket.
Most home insurance policies include a minimum of $100,000 in liability coverage, but you can often choose a higher amount, such as $300,000 or $500,000. Coverage is generally capped at $500,000. If you want more protection, you may consider adding umbrella insurance.
Liability insurance is part of home insurance policies and the cost is bundled. In a report compiled by the National Association of Insurance Commissioners based on 2018 data, home insurance averaged $1,249 per year, while tenant insurance averaged $179. $ per year.
Many factors influence the cost of a renter’s or homeowner’s policy, including location, deductible amount, coverage levels, and more. Your credit score can also influence costs, as can bundling your home or tenant insurance with other policies, such as auto insurance.
Renters liability insurance works the same way as homeowners insurance in terms of what it covers and what it doesn’t cover. If someone is injured during a visit to your residence or if you cause unintentional damage to their property, your liability insurance will protect your property. Additionally, tenant liability insurance can also help cover the legal costs associated with lawsuits arising from these types of calamities. Coverage amounts typically start at $100,000, but you can increase or decrease this amount, depending on your insurer.
Does liability insurance cover dog bites?
It depends on your policy. In many cases, your policy’s personal liability clause will provide coverage up to the policy limits. However, some insurers will not issue a home, condo, or renter’s insurance policy if you own a breed of dog that may be considered high-risk, such as a pit bull or Doberman pinscher, or if your pet has a history of bites. .
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