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Personal Liability Coverage: What Homeowners Insurance Covers

Personal liability coverage is a component of homeowners insurance. If you are held legally responsible for injury to other people's bodies or damage to other people's property, personal liability coverage will compensate for medical bills and other losses up to your policy's coverage limits. Without this coverage, you would have to pay for any damages out of your own pocket.

Personal liability coverage also protects you and your family members from personal liability claims that result from a visitor suffering bodily injury or property damage while in your house or on your property.

From 2015 to 2019, the average homeowners liability claim was about $22,363.

Each year, about one in 1,440 insured homes is subject to a personal liability insurance claim, according to the Insurance Information Institute (III). Further, from 2015 to 2019, the average homeowners liability claim was about $22,363.

Does Homeowners Insurance Include Personal Liability Coverage?

Yes. The standard homeowners policy includes four kinds of insurance products, one of which is personal liability insurance coverage:

  • Dwelling coverage, which covers the exterior and interior of your home's structure
  • Personal property, which covers the loss of your belongings
  • Additional living expenses, which covers your expenses if your home becomes uninhabitable
  • Personal liability coverage

In the U.S., homeowners insurance costs about $1,300 a year, on average, for a house with $250,000 in dwelling coverage, according to Quadrant Information Service's most recent data. The personal liability portion of a homeowners policy typically has at least $100,000 in coverage against personal liability claims, but coverage limits can reach $500,000 or higher, depending on your choosing. In general, you should purchase enough personal liability insurance to cover the value of your assets.

What Does Personal Liability Insurance Cover?

Personal liability insurance covers not only payouts to injured third parties but also the legal costs you incur when defending yourself against a personal liability claim.

A personal liability policy will pay for your legal costs, not just a claim.

However, homeowners personal liability insurance covers anyone else who visits your property: the babysitter, the pizza delivery guy, the handyman, the lawn-care worker, the home nurse, your kids' friends and, say, your next-door neighbors.

Examples of Property Damage Claims

  • A tree on your property falls on your neighbor's house or car.
  • Your child's baseball breaks a neighbor's window.
  • Your dog chews up your friend's designer purse.
  • You fall asleep with a cigarette, causing a fire that spreads to a neighbor's home.

Examples of Common Injury Claims

  • Bodily injury due to damaged walkways, floorboards, thresholds, stair steps and bannisters
  • Bodily injury due to wet, oily, icy or other slick surfaces
  • Bodily injury due to loose rugs, carpets and extension cords
  • Bodily injury due to a trampoline, basketball court or pool
  • Bodily injury caused by dog bites, accidentally discharged firearms and intoxication

Drunk Guests Are a Liability

If a guest gets intoxicated at your house, you could be held legally responsible for any damage they cause after they leave your house. According to the III, 37 states have adopted so-called social host liability laws, which allow car-accident victims to sue the person (or business) who served alcoholic drinks to the offending driver. When the offending driver's auto insurance policy runs out, the liability portion of most homeowners insurance policies would cover the balance of such a claim.

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What Does Personal Liability Insurance Not Cover?

Your personal liability insurance does not cover you or your family members: Health insurance pays for your family's medical payments, and homeowners personal property insurance pays for your family's personal possessions, whether stolen, lost, or accidentally damaged or destroyed.

In general, personal liability coverage included in your homeowners insurance policy will not cover two kinds of events: bodily injury or property damage caused intentionally and bodily injury or property damage not caused through negligence, so fix your rickety staircase.

Intentional Acts

Personal liability insurance does not cover intentional acts of bodily injury or property damage. For example, if you or a family member uses a golf club to shatter your neighbor's car windshield, your insurance company will not pay for that property damage.

If you have a physical altercation with your best friend and fracture one of his bones, personal liability coverage will not pay for your friend's resulting medical bills.

Personal liability insurance covers only accidental damage to property and houseguests who have been accidentally injured through the homeowner's negligence. For example, if your dog bites someone because your dog was not properly leashed, your policy will pay.

Disproved Negligent Acts

Property owners have a responsibility to make sure their property is reasonably safe. If you or a family member is aware of a potential hazard—an unstable bannister or a recently waxed floor, for example—and take no steps to eliminate that hazard or provide adequate warning of that hazard, you could be sued for negligence. To fight a lawsuit claiming negligence, your homeowners insurance policy will cover legal costs.

What Am I Not Liable for in My Home?

Every accident on your property does not guarantee a legal claim of injury or property damage. For example, you cannot be held legally responsible if someone is injured on your property through their own clumsiness, unwise actions or intoxication. Further, you cannot be held liable for negligence if your friend slips and falls because you just spilled some olive oil on your hardwood kitchen floor. Indeed, you cannot be held responsible for your friend's medical bills because you had no time to fix the problem that led to the slip-and-fall injury.

However, there are certain personal liability claims that your insurance company may or may not be willing to honor under your specific liability coverage. Talk with your insurance agent to find out what your homeowners policy will cover and what it won't cover.

Should I Get Umbrella Insurance?

If you are worried that the personal liability portion of your homeowners insurance does not offer enough coverage, you can ask your carrier to increase your personal liability coverage limit or get a policy with broader coverage. However, any increase in personal liability coverage limits will entail an increase in the cost of the liability insurance itself. Fortunately, under most policies, there aren't too many insurance companies that won't allow you to increase your policy limits to protect your significant assets.

An umbrella policy will pay when your standard home coverage runs out.

Another option is an umbrella policy, which offers a layer of additional coverage over and above a home insurance policy's limits. An umbrella policy protects you against substantial claims. As any personal injury lawyer will tell you, a slip and fall can cause spinal cord damage, broken bones, skull fractures, traumatic brain injury, soft-tissue injuries, nerve damage, contusions, muscle strain and many medical payments. Also, damage to someone else's property can cost a bundle—for example, your neighbor's car could be totaled if that old oak tree in your yard falls on it.

Condo Insurance for Liability

If you own a condo, your home insurance will include personal liability coverage, which will pay out for the same personal liability insurance claims under the same conditions as a standard home insurance policy. Further, you can increase your liability limit just like you can increase your overall policy limit, and you can also get an umbrella policy. However, unlike standard home coverage, your liability protection will not extend beyond the walls of your apartment or condominium.

If there is a lawsuit filed for injuries or property damages sustained outside the condo, the landlord's insurance coverage or, respectively, your condo association will pay for those medical expenses or the cost of property damage.

Buying Adequate Personal Liability Coverage

Personal liability coverage can save you thousands of dollars if you're found liable for injuries and other losses when visitors come to your home. It's important to have enough personal liability protection to cover your assets. Raising limits is one way to safeguard your assets and so is buying an umbrella policy.

Buying adequate homeowners insurance doesn't have to be a big financial burden. Using its AI-enhanced algorithms to sort through all the homeowners policies from every insurance company in your area, SmartFinancial can pinpoint the right homeowners insurance policy at the right price. Start a free quote by entering your zip code below.

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