It's an unsettling thought - the idea that a guest could be injured on the premises of your home, and you might end up being financially responsible. That's why one of the most important components of any home insurance policy is the personal liability section.

We will give you a look at the various types of personal liability, do a rundown of the personal liability coverage costs, recommended coverage limits, the types of covered incidents and review some expert tips.

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Here is everything you need to know about personal liability insurance.

Key Takeaways

  • Personal Liability insurance covers the cost of property damages if you are at-fault including bodily injury.
  • According to Insure.com’s rate analysis, personal liability insurance costs you around $10 a year for every $100,000 in coverage.
  • Personal Liability insurance covers anyone who lives in your home and is considered your family member.
  • You may need to buy additional coverage or an umbrella policy if the liability coverage provided by a standard homeowners, renters or condo policy is not enough.

personal liability insurance

What is personal liability insurance?

Personal liability coverage is a component of homeowners (all types) or renters insurance policy, also just called liability coverage. Liability will cover the cost of damages that you or other people covered by your insurance policy are responsible for causing to others, including bodily injury or property damage.

The personal liability portion of your policy will also cover the cost of defending a lawsuit if you are sued as well as any resulting judgments coming out of the lawsuit, up to your policy limits. Its main purpose is to protect your assets in the event of an unexpected event for which you are considered liable.

Personal liability coverage comes in a couple of different types:

Bodily injury

This type of liability coverage takes care of your legal responsibility when someone is injured in or around your home. An example would be someone falling down the stairs in your home or slipping on an icy sidewalk.

Bodily injury liability works in conjunction with the medical payments (sometimes called guest medical) portion of your homeowners policy. Medical payments to others help pay for reasonable and necessary medical expenses of non-residents who are accidentally injured on or around your property. Your personal liability covers when there are claims of negligence that caused the injury or a lawsuit filed due to the incident.

Guest medical typically covers (up to your limit):

  • Necessary medical and surgical expenses
  • Dental work
  • Ambulance
  • Hospital costs
  • X-rays
  • Professional nursing services
  • Prosthetic devices
  • Funeral services

Property damage

This liability type will cover the cost of damage you do to someone else's property. For example, your child throws a baseball through the neighbor's window, and it damages an expensive piece of art. Property damage would pay for both the window and the art piece, up to policy limits.

How much does personal liability insurance cost?

How much is personal liability insurance? Fortunately, it's reasonable.

Again, typically, it comes as part of a standard home insurance policy, and it isn't usually something you can purchase by itself.

But if you're looking for a breakdown on how much liability is, here you go: 

According to an Insure.com rate analysis, you're typically paying around $10 a year for every $100,000 in coverage. So, for half a million in liability, you're paying approximately $50 a year or a little over $4 a month.

Personal liability coverage limits

Personal liability coverage limits are essential, and you should set them carefully. Here are a few things you need to know about liability limits:

The majority of homeowner policies come with $100,000 in liability, but this is the low end of the coverage. If a serious fall or injury were to happen in your home, medical expenses would quickly eat up this amount of protection to say nothing of the cost of a lawsuit. Most experts recommend upping your limits to at least $300,000. The medical payments portion has its own limits as well. The amount of medical payment coverage you can purchase varies by the insurance company, but at least $5,000 is recommended.

Who and what does personal liability insurance cover?

First, let's talk about who is covered - and who isn't and then we'll get into what is covered and what isn't.

Who is covered?

When it comes to covered parties, usually anyone considered a family member and lives in your home would be covered by your policy. This includes your spouse, children, aging parents who live with you and employees who work in your home, such as child care providers.

Who is not covered?

It is important to note that tenants are not covered, so if you rent out a portion of your home, your tenants will need their own renter's insurance policy to be protected.

What does personal liability insurance cover?

Personal liability offers coverage for a wide variety of situations. Here are a few of the most common claims, as well as a few unexpected claims that would also be covered:

  • Many dog bites: According to the Insurance Information Institute, dog bite claims on homeowners insurance policies cost roughly $400 million a year, and they account for over one-third of all home insurance liability claims. As noted, many dog bites are covered, but dog bites from certain breeds may not be covered. You'll want to check your policy to know for sure if dog-related damages are covered.
  • Slips and falls: A trip down the stairs or a fall on a slippery sidewalk can not only result in costly medical bills, but a lawsuit is also a possibility.
  • Neighborhood damage: A baseball through a neighbor's window or a rock that was thrown by a lawnmower that damages your neighbor's house or car are all covered.

Here are a few uncommon occurrences that are also covered:

  • Libel and slander: Most, but not all, homeowner policies offer defamation of character coverage, which will cover you if you are accused of libel or slander. There are exclusions, so be sure to check your policy for details.
  • Food poisoning: If your cooking at the holiday party makes your guests ill, your homeowners policy should cover the medical bills and possibly any resulting lawsuits. There are restrictions on most policies, so check the wording of your policy.
  • Outside the home: Your homeowners policy may also cover accidents outside the home. If you manage to damage a hotel lobby or hit someone with a golf ball you shank off the tee, your homeowners policy should step up to cover the damages.
  • Any intentional acts are not covered. For example, if you push someone down your staircase, you will be on your own for all bills associated with the incident.

What is not covered under personal liability insurance?

Homeowners, condo and renters insurance have exclusions, namely that household members cannot file a claim against the coverage. For instance, the household exclusion would keep residents of the home from making a medical claim for slipping on their icy front porch. Instead, the injured party would need to place a claim with their own health insurance provider for the resulting medical bills.

Also, your home vehicles are not covered under either the personal property or liability portion of a home insurance policy. So, while a neighbor can make a claim if your child throws a baseball and it breaks a window of their vehicle, if it happens to your vehicle, you cannot make a claim under your home policy. You could make a claim under your car insurance policy's comprehensive coverage.

Each home policy has its own specific list of exclusions, so read over your policy in its entirety to find what yours are and call your agent to be sure.

Is personal liability insurance required?

When it comes to homeowners insurance, liability is not technically required, but it's very difficult to find a policy that doesn't include some liability. "While it's possible to get a homeowner policy without a liability component, it wouldn't necessarily be cheaper as these days insurance is sold as a package," says David Meltzer, founder of the East Insurance Group.

Who needs personal liability insurance? If you have a mortgage on your home, your lender will require that you have a homeowner policy to protect its asset. And since it is actually more work (and not necessarily cheaper) to get a policy without liability, industry experts recommend buying a standard policy.

Do I need an umbrella policy?

An umbrella policy is a liability insurance policy that supplements your home's personal liability portion, condo or renters policy. A high-figure judgment against you due to a lawsuit could result in you having to sell your home and liquidate other assets -- including retirement funds or a child's college fund -- to settle a claim that exceeds your policy limits. If you lose a lawsuit, all of your assets are at risk, which is why umbrella policies play a critical role in ensuring you have adequate protection.

The great thing about umbrella policies is that they are very affordable for the amount of coverage they offer. While costs will vary depending on your personal circumstances, expect to pay around $150-$200 for $1 million in coverage. Umbrellas are usually sold in $1 million increments up to $5 million.

Many insurance companies require that you already have a certain amount of liability car and homeowners insurance in place before selling you an umbrella policy. These limits typically are at least $250,000 worth of liability car insurance to pay for injuries to others you cause in an accident, and $500,000 worth of liability car insurance to pay medical bills for anyone accident you cause. Generally, you must also have at least $300,000 in liability coverage for your home. Check with your insurance company regarding its umbrella requirements.

Expert tips on how to buy personal liability insurance 

Personal liability is an absolute necessity, as you never know when an accident or error in judgment can have a major impact on your life. "Liability insurance is essentially asset protection," says Thomas J. Simeone with Simeone & Miller in Washington D.C.

A mistake or accident can quickly put all of your assets at risk if you are not properly insured. And, if you think it won't happen to you, think again.

"In one case, we collected $100,000 from a homeowners policy when a woman negligently rode her bike through a crosswalk and injured our client, who was a pedestrian," says Simeone. "And in another, we settled for $300,000 where a woman was walking her dog and it bit the ear of a child."

Here are a few tips from some industry experts regarding personal liability coverage:

Up your limits

The liability coverage provided by a standard homeowners, renters or condo policy is often not enough. "Do not skimp on insurance, especially if you have significant assets. People with high income should not only purchase the highest level of liability insurance available, usually $300,000 - $500,000, they should also purchase an umbrella policy," advises Simeone.

Hussain Al-Mutawakil with Sahouri Insurance agrees. "We always recommend that the minimum to carry is at least $500,000 combined single limit or $1 million when the carrier offers it," he says. "We sometimes also recommend an umbrella policy as well."

Consider an umbrella

All of our experts recommend adding an umbrella policy to your insurance portfolio.

"We usually recommend umbrella policies as they are usually inexpensive and, given the verdicts that can be handed down, can provide crucial protection if you or a family member is found at fault in a number of accidental situations," says Travis Biggert with HUB International.

An umbrella policy will also protect you in the case of accidents caused by an older child who is still financially dependent on you but not living at home, says Meltzer.

Now it's time to break out your homeowners policy and check your personal liability limits. If they are too low, contact your agent to make sure your assets are completely protected.

Frequently asked questions about personal liability insurance

What is personal liability insurance?

Personal liability insurance covers the expenses (or at least some of the expenses) that you would otherwise incur if something happens to somebody else on your property. You may also hear it called home liability insurance or property liability insurance.

It is helpful to remember the words "if something happens to somebody else." This may be called personal liability coverage, but it's generally about covering expenses related to another person from another household - and not you or a family member.

Do I need personal liability insurance coverage?

Yes. Once you're a homeowner, you need it. The good news is that it's generally built into your homeowner's, renters or condo insurance.

As we've mentioned, personal liability insurance covers you for mistakes you made (you bought a dog who answers to the name, "Killer"...).

Does homeowners insurance cover damage to other people's property?

Generally, yes.

You may think, "How am I going to be responsible for damage to somebody else's property?" But you could have a tree in your yard, after a big storm, fall into a neighbor's home. That new trampoline you bought for your kids could become unmoored in that big storm and go flying into the neighbor's living room window.

The personal liability coverage component of your homeowner's insurance would likely cover any of those accidents and pay for your neighbor's damages.

Does personal liability insurance cover injury to my home or household members?

Surprising as it may sound, no.

That said, if you're showing off in front of your kids, and you go skateboarding in your kitchen, and you forget that the door to the basement is open, and down the stairs you go, you probably weren't planning on suing yourself or a family member for negligence. And you have health insurance, right? Boy, we hope so.

And keep in mind - that if your kid's friend happened to be on a skateboard and went careening down some stairs or over your coffee table - and injured himself - your personal liability coverage would cover those hospital bills and any possible lawsuit.

Personal liability coverage, all in all, doesn't cost all that much, but the cost of not having it when you need it can be very high.

Is personal liability insurance worth?

Yes, personal liability insurance is worth it, if someone is injured at your home, if you have a dog that bites an invited guest or if you are to blame for any accidents happening on premises; this coverage will help pay for the medical bills or any kind of bodily injury or property damage you cause to others.

How to get personal liability insurance?

In order to make sure that you are adequately covered for your home or rental, it is important to look at the amount of personal liability coverage and limits in place. As you increase the value of your home or what's inside, you should contact your insurer to make sure you have enough coverage, and everything is covered.

Is family liability protection the same as personal liability?

Personal liability coverage provides protection to you in case of injury or destruction to someone else's property. Personal Liability is usually included as part of your homeowners policy. Whereas family liability insurance also provides additional coverage, but it is a part of all the homeowners insurance policies including condo and renters.

How personal liability insurance policies work together?

Insurance policies work hand in hand and build upon each other. Your homeowners personal liability insurance, for example, can only provide a certain amount of coverage—say $300,000. And your umbrella policy is limited to the same amount. This means that if you're sued in an incident covered by both policies and need more than $600,000 worth of coverages then it's going to take both policies combined to fill the gap.