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Personal liability insurance is one of the six main types of coverage provided by homeowners insurance.

Here’s a look at what the personal liability coverage portion of your homeowners insurance policy covers, what’s excluded, and how much coverage you need in order to best protect yourself and your family:

What is personal liability coverage?

As you can probably guess from the name, personal liability coverage is intended to cover expenses related to injuries or damages for which you (or members of your household) are deemed liable. The personal liability coverage included in your homeowners insurance policy protects you in case of lawsuits that claim you, a family member, or even a household pet, caused bodily injury or property damage.

These coverage limits can pay to defend you in court against a lawsuit, or to pay for damages awarded to someone else as the result of a suit. The maximum amount of personal liability coverage depends on your state and the limits you choose when you purchase your policy.

If you’re looking for a homeowners insurance quote with personal liability coverage, Credible can help you get started.

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How does personal liability coverage work?

If an eligible loss occurs, the coverage from this policy will step in to pay a range of different expenses, up to the policy limit. This could include the other party’s medical bills, the cost of litigating your case, or even the amount awarded to an injured party, and would be applied before you’re forced to tap into other assets to cover those damages.

Check Out: Everything You Need to Know About Home Insurance Claims

What does personal liability insurance cover?

Of course, policies may differ between insurers, but generally personal liability insurance covers:

  • Medical bills related to someone’s injury that occurs on your property, or as a result of your actions away from home.
  • The cost of defending you against litigation if you’re sued in a court of law.
  • Damages awarded against you, up to your policy limits.
  • Property damages or personal injury caused by your pets.
For example: Situations where your homeowners insurance policy’s personal liability coverage would likely kick in include:

  • A friend comes over to your home to visit and slips on your front steps, injuring their back
  • Your child is playing baseball in the front yard, and hits a homer directly into your neighbor’s windshield
  • Your dog escapes your yard and winds up biting someone out for a walk (or even their dog)
  • You bump into someone at the local bakery, spilling hot coffee on their arm and giving them second-degree burns

What does personal liability insurance not cover?

Of course, this personal liability insurance doesn’t extend to every possible situation, especially if other types of insurance policies are considered primary.

Your homeowners insurance liability coverage generally won’t pay if :

  • You’re involved in an at-fault car accident, but your auto insurance policy limits aren’t enough to cover all the other driver’s damages.
  • Your teenager breaks into a vacant home with some friends, causing damage to the property.
  • Your pet dog bites you, requiring you to get stitches.
  • Your child hits a baseball into your vehicle’s windshield.

Generally, personal liability insurance does not cover your own property damages or personal injuries. It also excludes incidents related to your business or auto accidents, and won’t cover intentional damages such as assault or vandalism.

How much personal liability coverage do you need?

In addition to dwelling coverage, the typical homeowners insurance policy comes with liability coverage limits starting around $100,000. However, homeowners have the option to increase this coverage for an additional cost.

When it comes to choosing your personal liability coverage limits, it’s important to consider everything that you have at stake.

For example, if you’re sued and found liable for damages that occur on your property or as a result of your (or your family’s) actions, all your current assets could be lost. This includes your savings and retirement accounts, your personal property, investments, and even your family’s home.

How much could you potentially lose if someone were to sue you for catastrophic damages?

Tip: One way to decide how much personal liability insurance coverage you need is to calculate your net worth. Then, choose policy limits that meet or exceed this amount.

In some cases, it may also make sense to purchase an umbrella policy or excess liability coverage, so that you’re always protected against loss, regardless of where or when an incident occurs.


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Learn More: How Much Homeowners Insurance Do I Need?

Cost of personal liability insurance

Though personal liability insurance can protect you and your assets from financial ruin, it’s surprisingly affordable. In fact, increasing the personal liability limits of your homeowners policy can cost you just a few extra dollars each month.

The actual cost will depend on many personal factors, such as your insurance company, your home’s size and location, how many individuals live in your home (and how many of them are under the age of 18), whether you have certain breeds of pet, and even the hazards or structures on your property (such as a pool or trampoline). Many of these factors can increase your personal liability risk, and may increase your cost for coverage as well.

In general, though, you can expect personal liability insurance to cost somewhere around $10 to $20 for each additional $100,000 in coverage you select.

The table below gives an example of how adding more personal liability coverage may affect your annual premium.

Personal liability coverageAnnual homeowners insurance rateCost of increased coverage
$100,000$3,098
$200,000$3,114$16
$400,000$3,139$25
$600,000$3,161$22

Homeowners insurance is designed to protect one of your single biggest assets: your home. Built into that coverage, however, is an added protection in the form of personal liability coverage, which can further protect you (and your assets) if another person or their property is damaged. This coverage is generally very affordable to increase, but can be invaluable when it comes to shielding your other assets from liability.

Disclaimer: All insurance-related services are offered through Young Alfred.

About the author
Stephanie Colestock
Stephanie Colestock

Stephanie Colestock is a Washington, D.C.-based writer who has more than 11 years of experience in writing about investing, business, and personal finances. She’s contributed to outlets such as Yahoo! Finance, MSN, Investopedia, Credit Karma, Credible, and more.

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