A home is a valuable asset — one that can be at risk if someone sues you. Personal liability coverage is a standard part of homeowners insurance policies, and it kicks in if you’re responsible for injuries or property damage to others, whether on or off your property.
Courts may find you legally responsible if someone gets hurt while visiting your home or if you or a member of your household cause harm or damages while away from home. In those cases, your personal liability insurance can pay any judgment against you, up to your policy’s limits.
Here’s what to know about personal liability coverage and how to evaluate it when you’re comparing homeowners insurance quotes.
Personal liability coverage is part of your homeowners insurance policy, and it’s also known as Coverage E. It protects you financially if someone accuses you or a member of your household in court of causing injuries or damages to someone else.
Your liability coverage can pay for your legal expenses and any court award you must pay, but only up to your policy limits. Personal liability limits typically start at $100,000.1
In addition to personal liability coverage, homeowners policies also include:
Dwelling coverage for the physical structure of your home
Other structures for things like fences and sheds that aren’t attached to your house
Personal property for your belongings
Loss of use if you have to temporarily move out while your home’s being repaired after a covered event
“Personal liability insurance protects the named insured and resident household members in the event of an accident that results in bodily injury or property damage for which you are legally liable,” says Chris Arnold, principal at Fitzgibbons Arnold & Company.
While personal liability is technically part of your homeowners insurance, it often applies to damages that occur outside your property. Your personal liability insurance covers:
Bodily injury to others on your property
Damage you cause to someone else’s property
Legal fees and court awards, up to your policy limit
If someone is injured at your home or property, you may be liable for any medical costs they incur or legal fees if they sue you. Coverage extends to accidental injuries and injuries sustained due to negligence. Injuries that would be covered under your personal liability coverage may include:
A guest falls down your basement stairs.
A contractor slips on ice on your driveway.
Someone is injured tripping over your dog or cat.
A houseguest injures themselves due to a faulty handrail or broken step.
If you accidentally damage someone else’s property, your personal liability coverage will help pay to repair or replace the damaged property. This could include the following scenarios:
Your child accidentally throws a baseball through your neighbor’s window.
A tree on your property falls and causes damage to a neighbor’s house or shed.
Your dog ruins a neighbor’s fence.
Your child dents someone’s parked car while riding their bicycle.
If you cause harm to someone else or damage their property, they may be content to receive financial compensation for the injuries they sustained or the replacement of their belongings or property.
In some instances, though, a person may seek financial compensation for their damages by suing you. Personal liability coverage pays for legal costs to defend you in court. It’ll also cover any legal fees or court awards up to the policy limit if a court of law finds you liable.
Not all injuries in your home or accidents are covered under personal liability coverage. Sometimes, you may be required to pay for damages out of your pocket. These instances could include the following.
Injuries often occur in your own home or on your property. While an injury can lead to expensive medical bills and a long recovery, only injuries to people who live outside your household are covered under personal liability insurance. If you or a child suffers an injury in your home, your household health insurance policy would potentially cover your medical expenses, not your homeowners insurance.
Your personal liability insurance won’t cover injuries you or a household member purposely inflict on someone else. You’ll have to pay out of pocket for any financial damages a court may award the injured parties. If you or a family member commits a crime, you can’t file a homeowners insurance claim for injuries the victim suffers.
Running a home business doesn’t mean your personal liability insurance protects your business. If a client sues you for bad advice, liability coverage won’t cover your legal fees or court awards. It also wouldn’t cover any injuries that occur in your home related to your business.
Only business insurance would provide financial help for legal issues involving your business.
Car accidents don’t fall under your personal liability insurance. Your automobile liability insurance would cover injuries and damages you cause while driving.
Because personal liability coverage is an essential part of a homeowners insurance policy, it’s difficult to accurately separate out its cost. But you can expect to pay roughly $10 per year for every $100,000 of liability coverage you buy.
Personal liability coverage is typically the cheapest part of a homeowners insurance policy.2 The average cost of a homeowners policy with $300,000 in dwelling coverage and $300,000 in liability coverage is currently $2,377 per year, according to Insurify data.
Homeowners liability limits generally start at about $100,000, but coverage limits commonly range from $100,000 to $500,000.2 Some insurers even sell policies with $1 million in liability coverage. There’s no right amount of personal liability coverage to purchase, as the answer varies depending on your situation.
When deciding how much liability coverage to buy, consider:
The value of your assets
Your location
Whether you think you’re likely to get sued or not
Certain risk factors may increase your likelihood of a lawsuit. You may consider increasing your liability protection if you:
Own a swimming pool
Have a trampoline in your backyard
Frequently set off fireworks on your property
Own an older home in need of repairs
Live in a cold climate
Have a long commute
Frequently host people in your home
Ideally, you should have enough coverage to insure everything that you own. You’re financially responsible for liability costs that exceed your coverage limits.
If you have significant assets with a value that exceeds your available liability coverage, you may want to consider purchasing an umbrella policy.
“A personal umbrella insurance policy provides an extra layer of coverage for named insured and resident household members over and above your standard homeowners and auto insurance policies,” says Arnold. “The personal umbrella coverage offers additional limits of protection for you in the event of potentially devastating liability claims or judgments against you, i.e., a catastrophic event resulting in bodily injury or property damage for which you are legally liable.”
You should consider adding personal umbrella coverage if:
Your net worth exceeds the available liability limits.
You frequently travel outside the U.S.
You frequently host events and groups in your home.
You coach kids’ sports.
You own a dog.
“The limits of coverage typically offered start at $1,000,000 and can go up to $5,000,000,” Arnold says.
Like the other parts of your homeowners insurance policy, personal liability coverage is something you hope you’ll never need to use. But if you do ever have to rely on it, it’s important to understand how the coverage works. Here are answers to some commonly asked questions to get you started.
Personal liability coverage is there to protect you financially if someone sues you for property damages or injuries. It can protect you whether the injury or damage occurred on your property or while you — or a member of your household — were away from home.
Yes. Most types of homeowners, renters, and condo insurance automatically include liability coverage. Only one type of policy, called an HO-1 or Basic Form, excludes personal liability insurance. But this type of policy isn’t common. Many insurers don’t offer it, and mortgage lenders generally don’t accept it as adequate coverage.
Umbrella insurance, often called excess liability insurance, can cover judgments against you that exceed the personal liability limits of your homeowners insurance policy. It can also cover some liability claims that your homeowners policy typically won’t, such as defamation or libel claims. And it can pay any legal fees you face that your homeowners insurance doesn’t cover.
Personal offense coverage is an add-on that some insurers offer for homeowners policies. It can cover certain actions you may be held liable for, including:67
Libel
Slander
Defamation of character
Invasion of privacy
False arrest
Malicious prosecution
Wrongful eviction
Wrongful entry
Legal costs
Personal offense coverage is different from personal liability coverage. For example, if your child physically injures another kid on the playground, the liability coverage of your homeowners policy might pay for the injuries. But if your child makes hurtful comments on social media about another child, and a court finds you liable, personal offense coverage would pay.
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