Personal liability coverage in home insurance: How does it work?

Personal liability coverage is the portion of homeowners insurance that covers legal and medical expenses if you are found liable for someone’s injury or damage to their property.

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Personal liability coverage is the part of your homeowners insurance that pays for expensive lawsuits or settlements if you’re found legally responsible (aka liable) for injuring someone or damaging their property. That means if a visitor is injured while using your pool and you’re found responsible, personal liability coverage can help pay for their medical bills and lost wages while they recover. If you’re taken to court over the matter, personal liability insurance can also cover your legal expenses. 

You generally want enough personal liability insurance to cover the value of your assets (everything you own). If your coverage isn’t high enough to pay out for whatever is owed on the settlement, the injured party may be able to go after your assets and future earnings.

Key Takeaways

  • Personal liability insurance is the portion of your homeowners insurance that covers financial losses in cases where you’re legally responsible for someone else’s injury or damaged property

  • Most insurers offer anywhere from $100,000 to $500,000 in personal liability coverage

  • If you have a dog, pool, trampoline, or anything that could cause injury to someone else, you should make sure you have the maximum amount of liability protection

  • If you’d like more liability coverage than the amount offered through homeowners insurance, consider getting a personal umbrella policy

What is personal liability insurance?

If you’re found legally responsible for injuring someone or damaging their property, personal liability insurance can help cover any expenses associated with the incidents (legal fees, medical expenses, repair bills, etc). Coverage extends to incidents that occur both on and off your property. 

To use your personal liability coverage, you first need to file a claim with your insurance company. For your claim to be accepted, it needs to be proven that your negligence led to the injury or property damage. If negligence can’t be proven, then your insurance company will deny the claim.  

If your dog attacks and bites someone walking by your property, for instance, that would be a clear case of negligence on your part for not securely leashing the dog, and your insurance would likely approve the claim. Conversely, if a food delivery person trips over their own feet walking to your front door and injures themselves, that would not be a clear case of negligence on your part, and any liability claim would likely be denied.

Genius tip

In many cases, personal liability claims will be resolved without the need to proceed to court. Lawsuits tend to happen either after your insurance company denies liability for an incident, or if you ignore or decline the injured party’s request for your insurance information.

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What does personal liability insurance cover?

Personal liability coverage covers the costs if you or a family member are legally responsible for physically injuring someone or damaging their property. If you’re ever held liable for an accident, your policy can help pay for things like medical bills, attorney fees, court costs, and any property damage settlements. 

Bodily injury

Below are some different examples of injury claims that your personal liability insurance may cover:

  • Your dog bites a passerby or houseguest 

  • A visitor is injured using your pool or trampoline

  • Your firearm goes off while you’re cleaning it and it injures a neighbor or guest

  • A food delivery person slips and falls on your icy walkway 

Property damage

Personal liability coverage can also protect you if you’re responsible for damaging someone else’s property. If a clearly dead tree in your yard topples over onto your neighbor's house, for instance, you could be held personally liable for removing the tree and any damages to their home. If your neighbor (or you) are able to prove negligence on your part — either through evidence of prior knowledge or the clear and obvious condition of the tree, your insurer may agree to compensate your neighbor for the damages.

Genius tip

Your liability-related expenses are covered up to the personal liability coverage limit of liability in your policy. This is the maximum amount your insurer will pay out on a single liability coverage claim. Most insurers offer anywhere from $100,000 to $500,000 in coverage. 

What does personal liability insurance not cover?

Your homeowners insurance also includes a list of incidents that are not covered by personal liability coverage, including:

  • Injury to you or a resident of your household

  • If it cannot be proven that you were negligent

  • Injury or property damage that results from your business activities 

  • Damage to a car

  • Intentional acts 

  • Injury caused by certain breeds of dogs that are considered high risk

How much does personal liability insurance cost?

Personal liability coverage typically costs around $8 to $10 a year for every $100,000 in coverage, says Fabio Faschi, former property and casualty lead at Policygenius. If you max out your liability coverage at $500,000, it’ll only cost you around $50 a year, or a little over $4 a month.

Faschi noted that coverage may be a little more expensive depending on where you live. Liability protection in metro areas, for example, costs around $15 a year for every $100,000 in coverage. 

How much personal liability insurance do I need?

Your personal liability insurance coverage limit should be equal to the total value of your assets, or the combined value of everything you own. If you own two properties with a combined value of $400,000, for example, that’s $400,000 in real estate assets alone that you should protect with liability coverage. 

According to Faschi, it’s wise to max out your liability coverage limits.

“Many homeowners may not be aware of this, but despite its importance in terms of financial protection, your personal liability is one of the cheapest coverages on your policy,” he said. “For this reason, I almost always recommend at least $500,000 (in coverage) as it represents great value in protection compared to what it costs.”

Genius tip

When deciding how much personal liability insurance you need, it’s a good idea to consider the liability risk on your property. If you have a swimming pool, trampoline, or treehouse, for example, those are all potential risks that could result in a severe injury. If you have any of these on your property, you should strongly consider maxing out your liability coverage limits.  

What is a personal umbrella policy? 

A personal umbrella policy, or umbrella insurance, is a type of liability coverage that you can purchase in addition to your home insurance. If the liability coverage in your homeowners insurance is maxed out during a claim, your personal umbrella policy kicks in to cover the remaining costs. 

Personal umbrella policies are generally offered in increments of $1 million, with a maximum limit of $5 million. Policies typically cost around $300 a year for the minimum amount of coverage. If you have over half a million dollars in combined assets, personal umbrella coverage may be well worth it.

→ Learn more about umbrella insurance

Frequently asked questions

Can I file a liability claim against someone else’s homeowners insurance?

In certain states, the injured party can file claims with the liable party’s insurer. In other states, liability claims can only be filed by the individual named on the policy. If you fell and injured yourself at someone’s home, for instance, and you think they are legally responsible for your injury, ask if they would be willing to file a claim with their insurer to compensate you for medical bills. They may have no problem filing a claim and helping you out. If they are resistant toward getting insurance involved and you feel you’re rightfully owed damages, then you could pursue legal action. At this stage, the person you’re considering suing may give in and just file a claim.

What is personal liability insurance for renters?

Personal liability coverage is also included in most renters insurance policies. While tenants generally don’t need as much liability coverage as homeowners, this is still a valuable safety net for any renter with valuable assets worth protecting.

Why do I need personal liability insurance?

Personal liability insurance is the only way to protect your financial livelihood if you're ever found legally responsible for someone's injury or property damage. If you own a home and other expensive assets, you'll want enough personal liability coverage to cover their total value. If someone is injured and you’re found liable and you don’t have personal liability coverage, you’d be legally responsible to cover the settlement entirely out of your own pocket.

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