While many people are familiar with standard homeowners and renters insurance policies, they may understand less about personal liability insurance. These homeowners and renters may be surprised to learn that, in many cases, personal liability insurance is a component of their policies. Simply put, personal liability coverage protects you and your property if you are responsible for someone else’s injuries or damage to their personal property.
Personal liability insurance is part of most homeowners and renters insurance policies and may be referred to as “Coverage E.” It is designed to provide coverage in the event you are found liable for property damage or bodily injury to others. Whether a guest is injured due to your negligence, you accidentally damage someone else’s home or personal property, or someone else on your policy inadvertently injures another person, personal liability helps cover legal fees, medical expenses and repair costs.
While personal liability operates as a standard part of homeowners and renters insurance policies, it does have its limits. Most policies limit coverage to $500,000 or less. Those looking for additional coverage can purchase an umbrella insurance policy. Umbrella policies are designed to kick in once you’ve exhausted your personal liability insurance. Coverage often starts at $1 million and can go up to $10 million or more.
It is important for homeowners and renters to have a clear idea of what their personal liability insurance covers up to their policy limits. Specific examples of where personal liability insurance is activated include:
- Legal fees and court costs regardless of whether or not you are found liable
- medical bills that are the result of bodily injury to others that occur in your home. This can include injuries caused by your negligence, such as failure to repair a known tripping hazard on a ladder.
- lost wages until the injured party can return to work.
- Pain and suffering Lawsuits for injuries in your home can drain bank accounts, but personal 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 homeowners or renters insurance policies, be sure to read the fine print carefully to determine what the insurer excludes from coverage. While this may vary from policy to policy, standard exclusions include the following:
- At-fault car accidents, that are normally covered by your car sure.
- Injuries to yourself or household memberswhich are normally covered by health insurance.
- Damage or injury you intentionally cause
- Claims for injuries or damages related to your work or directing business out of your home.
The primary 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 valuable possessions such as jewelry, art, furniture, and electronics. Experts recommend taking an inventory of your property and assets to make an informed decision about how much personal liability coverage you need.
Let’s say you have $100,000 in personal liability coverage 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 homeowners insurance policies include a minimum of $100,000 in personal liability coverage, but you can often choose a higher amount, such as $300,000 or $500,000. Coverage is typically capped at $500,000. If you want more protection, you may want to consider adding umbrella insurance.
Personal liability insurance works as part of homeowners policies and the cost is bundled. In a report compiled by the National Association of Insurance Commissioners based on 2018 data, homeowners insurance averaged $1,249 per year, while renters insurance averaged $179 per year.
Many factors influence the cost of a renters or homeowners policy, including location, deductible amount, coverage levels and more. Your credit score can also influence the cost, as can bundling your homeowners or renters insurance with other policies, like auto insurance.
Renters personal liability insurance works similarly to homeowners in terms of what it does and does not cover. If someone is injured while visiting your residence or you cause unintentional damage to your property, your personal liability coverage will protect your assets. Additionally, renters personal liability insurance can also help cover the legal costs associated with lawsuits that stem from these types of calamities. Coverage amounts generally start at $100,000, but you may be able to increase or decrease this amount, depending on your insurer.
Does liability insurance cover dog bites?
It depends on your policy. In many cases, the personal liability provision of your policy will provide coverage up to the policy limits. However, some insurers will not write a home, condo, or renters 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 biting people . .
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