In everyday speak, ‘personal liability’ means that someone is legally responsible for something. In renters and home insurance, personal liability coverage can help reimburse you if you (or anyone listed on your policy) 1. accidentally injures someone, or 2. damages someone else’s property.
Here are a few scenarios:
- Someone’s injured on your property, and it’s your fault
- You accidentally cause damage to someone else’s stuff, or place
- Someone (or a pet) listed on your policy causes damage to someone else
If any of these three things happen, personal liability insurance covers the cost of a lawyer to defend you, and your insurance company will pay the damages you’re responsible for.
Why would someone need a lawyer?
Let’s say your dog bites your neighbor, Mike. If you don’t give Mike your insurance info (either because you’re uncomfortable doing so, or don’t have the chance to), he might hire a lawyer to send you a letter, letting you know that Mike is pursuing the claim, and will take you to court if you don’t provide your insurance info within 30 days.
If this happens, here’s how to protect yourself:
- Provide your insurance company with the lawyer’s info, so your insurer can reach out to them on your behalf
- File a liability claim, and send Mike your claim number and your adjuster’s contact info
What does personal liability insurance cover?
The following are some situations when your personal liability coverage could come in handy:
- When you need a lawyer to defend you in court
- Medical payments to others (over $5K b/c that’s what your medical payments coverage is for)
- Property damage payments
- Damages caused to others by members of your household
- Damages caused to others by your pets
When is damage caused by my pets covered?
If your pet bites a fellow animal or person- or damages someone else’s property- your liability coverage could kick in. (But if your pet damages your stuff, you’re not covered.)
Some policies don’t cover your dog at all. If your dog has a history of biting, or is categorized as high-risk, your liability coverage may not cover ‘em.
What personal liability insurance doesn’t cover
Here are some things personal liability insurance doesn’t cover:
- You intentionally cause damage to someone’s stuff or place
- Your car damages someone’s stuff or place (that’s what car insurance is for)
- You conduct business activity out of your home, and someone or something is damaged as a result
- Property that is rented to you is damaged
Plus, one of the biggest sources of confusion is whether liability protection includes damages to your apartment’s structure: “Around 53% of denied liability claims at CBS are related to property damage, because people aren’t completely sure what’s actually covered,” says Lauren.
If you accidentally cause damage to your apartment’s walls, floor, ceiling, or windows due to fire, smoke, or explosion, you are covered- but you’re not covered if it’s due to vandalism, water damage, dog bites, or neglect.
For example, if you try to hang a new mirror on your walls, and the nail accidentally hits a pipe, which bursts and damages your walls and furniture, your walls aren’t covered by your renters insurance, but your furniture is.
What else isn’t covered by liability coverage? Here are some more examples:
- You, or someone else on your policy, is injured
- Someone is injured on your property and it’s not your fault
If someone is injured in your home and it’s not your fault, your ‘medical payments to others’ coverage on your homeowners or renters insurance policy could pay for their medical bills. And your insurer must still defend you, and determine whether to settle or defend.
But if the injury is your fault, your medical payments to others coverage would kick in first, before your liability coverage kicks in.
How can you tell whether an injury is your fault (aka, you were considered negligent)? It depends on the details of the situation, but generally, you’re liable if:
- You don’t warn your guests of a known hazard
- You don’t report a hazard to a property manager (if you rent your apartment or home)
“In insurance speak, you’re negligent if you had a duty owed, breached that duty, and as a result, someone was injured or property was damaged,” says James H., the Chief Claims Officer at CBS.
If you do report the hazard to the property manager, and they don’t fix it in a reasonable amount of time, your landlord could potentially be responsible.
How does personal liability coverage work?
When you purchase a renters or homeowners insurance policy, there are a few main types of coverage included:
- Coverage for your place (if you’re a homeowner, condo owner, etc.)
- Coverage for other structures on your property (for homeowners only)
- Personal property coverage aka contents insurance (at your place, and anywhere else)
- Additional living expenses (if your place becomes uninhabitable)
- Personal liability coverage
Each area has its own coverage limit. So when you customize your renters or home insurance policy to meet your needs, you can select how much coverage you’ll have for each of these categories (within a certain range, of course).
So, how much personal liability coverage do I actually need?
For personal liability insurance, coverage will typically start at $100,000, which means your renters or homeowners insurance company will pay up to $100,000 in legal fees, medical expenses, or damages per liability claim. That may seem like a high number, but it might not be enough to cover the cost of an accidental loss of life or serious injury on your property.
To figure out how much liability coverage you need, first determine how much your stuff is worth. “Liability coverage should be based on how much you own and what type of risks you have, like a dog,” says Erik D., a Claims Experience Advocate at CBS. “You should also factor in your liability exposure.”
Meaning, if you live in an apartment building with 200 other units, you have much higher ‘liability exposure’ than someone renting a standalone home would. That’s because if you cause an apartment fire that spreads to the entire building, you’re on the hook for the entire building’s structural damage, as well as damaged stuff, injuries, and relocation costs for everyone living in those 200 units.
Unless you could spare an extra $100,000 in unexpected costs, “you should get $200k-$300k in coverage just in case,” says Erik. “A few extra bucks or so per month to get an extra $100k in liability coverage is probably worth it.”
So if you’d like to increase that policy limit, you can go right ahead! You can increase your coverage up to $1M in many states where CBS is active, although some states set lower limits, with California, for example, capping liability coverage at $500K.
Btw, when it comes to your liability coverage, there’s no deductible you have to pay (pretty sweet, right?).
How much does personal liability coverage cost?
A standard renters or homeowners insurance already includes personal liability coverage. Nationwide, renters insurance costs an average of $18 per month, while homeowners insurance costs $140 per month on average.
Tenant liability insurance vs. renters insurance
If you’re a renter in the market for insurance, you may have heard about tenant liability insurance, which isn’t quite the same thing as a renters insurance policy that covers your personal liability. Instead, tenant liability insurance covers your liability for any damage you might do to your landlord’s personal property.
A tenant liability insurance policy won’t cover any damage to your personal property. For that, you’ll need a renters insurance policy.
Examples of personal liability coverage
Let’s say you and a family member decide to throw a house party for your best friend’s birthday. All is fine and well, until your klutzy friend slips and falls in your kitchen, twisting his ankle. He heads over to the hospital, receives his medical bills, and decides to sue you (bummer!).
If this happens, your renters or homeowners policy might just cover the costs of his medical bills and your legal fees, all thanks to your personal liability insurance.
Let’s say you take Fido, your pup, to the dog park. He spots his doggy BFF, Rex, and the two start playing. Cute!
Suddenly, out of nowhere, Fido bites Rex!
Rex’s owner takes him to the vet, and sends you his bills. Unfortunately the bite was serious and you are looking at a bill for $25K (gasp!). Luckily, your liability coverage under your renters or home insurance policy can help cover the cost of these bills.
Anything else I need to know?
That about covers it! (No pun intended.)
And if you’re feeling curious to learn even more about your insurance coverage (kudos!), here’s everything you need to know about personal property, and loss of use. Happy reading!