What Is Personal Liability Coverage in Homeowners Insurance? (2023)

Mistakes can happen no matter how careful we are. That’s where liability coverage comes in. Perhaps your child accidentally breaks your neighbor’s window and the neighbor asks you to foot the bill for repairs. Liability coverage could help cover some or all of the costs.

Liability coverage provides payment up to a limit for loss when an accident happens in your home or you’re liable for damage elsewhere. Often this comes included in your comprehensive policy for home, rental or condo insurance. Below, we explain how it works for different types of insurance and what to consider when choosing coverage.

Liability coverage gives you financial protection if you damage another person’s property, accidentally injure someone or someone gets injured at your house. Coverage also extends to other household members, including children and pets.

Liability coverage is generally broken down into two components — personal liability and medical expenses for bodily injury.

Personal Liability

Personal liability insurance covers damages and legal fees up to the liability limit if you accidentally cause property damage or injure someone. Insurance companies can handle the entire claims and lawsuit process, from submitting a lawsuit response to negotiating a settlement.

Medical Expenses

If someone gets hurt at your home, the medical expense coverage can pay for all or part of their medical costs. Medical bills can be sent directly to the insurance provider without filing a claim, and eligible medical costs are paid up to the coverage limit.

The best homeowners insurance policies provide coverage for your home’s structure and your personal belongings as well as liability coverage. Policy limits for personal liability usually range from $100,000 to $500,000, and the coverage can help you pay for:

• Accidental property damage or bodily injury caused by you, your family or your pets
• Legal costs if you’re sued for property damage or bodily injury
• Medical expenses resulting from a guest’s injury at your home

Typically, there is no deductible you’ll need to pay out of pocket before your homeowners liability coverage kicks in.

Excluded Events

Not every injury or property damage event is covered under every liability policy. If you have cheaper homeowners insurance or less-comprehensive coverage, you’ll want to read the fine print of your policy.

With most types of coverage, damage or bodily injury that you or a household member intentionally causes to someone or their property isn’t covered.

Personal medical bills and damage to your home caused by someone who lives there aren’t typically covered, either. So, if your own child breaks your kitchen window while playing softball, you’re on the hook for repairs.

Also, it’s important to note that liability coverage on your car insurance policy is different from homeowners insurance liability protection. Damage from at-fault car accidents may fall under your bodily injury liability coverage, property damage liability insurance, medical payments coverage or other auto liability coverage, but it won’t be covered by homeowners insurance policy — even if it happens in your driveway or garage.

Liability insurance in renters insurance policies is similar to that of a homeowners insurance policy. It provides coverage if someone gets hurt at a place you rent or you cause an accident that results in a loss somewhere else, like dropping an expensive piece of art at a friend’s house. Even the cheapest renters insurance will have liability coverage that can help pay for:

• Bodily injury and property damage caused by you, your family or your pets by accident
• Medical bills resulting from a guest’s injury at your rental
• Legal costs if you’re sued for property damage or bodily injury

Excluded Events

Rental liability coverage exclusions include at-home accidents where you get hurt or cause damage. For example, if you slip in your own shower, you can’t file a claim for medical bills.

If you damage the floors in a rental, you can’t get a payout for repairs to avoid losing your security deposit. But if a guest visits and causes damage due to negligence, you could file a claim against their insurance, and their own liability coverage could pay for repairs.

The condo insurance liability coverage can protect you if someone gets injured in your unit or if you accidentally hurt someone or damage property elsewhere. Condo liability coverage pays for:

• Property damage and bodily injury you cause by accident
• Medical bills resulting from a guest’s accident in your condo
• Legal costs if you’re sued for causing accidental damage or bodily injury in someone else’s home

Excluded Events

An intentional event that harms someone or their property wouldn’t be covered under condo liability coverage.

Also, damage or injury that happens in the common areas of your condo community would likely be covered by your condo association’s insurance and not your own.

The minimum liability coverage you can obtain is often $100,000, but the Insurance Information Institute (III) recommends raising that coverage to between $300,000 and $500,000. At a time when building material and medical care costs are high, claims for injuries or damage could easily exceed $100,000, and going with more than the minimum coverage could give you peace of mind that you won’t end up underinsured if an incident happens.

Another factor to consider when choosing coverage is your assets and ensuring you have enough coverage to protect yourself if someone files a lawsuit against you. For extra coverage, consider purchasing umbrella insurance.

Umbrella insurance provides coverage beyond the limits of your existing home, rental or condo insurance policy. If a claim for damages or bodily injury exceeds your insurance coverage, umbrella insurance kicks in to help cover costs.

An umbrella policy may also offer extra bells and whistles, like coverage against libel and slander claims. While insurance quotes can vary, for $1 million in umbrella coverage, you might pay $200 to $350 per year ($17 to $29 per month), according to the III.

Accidents happen, and liability coverage can help protect your financial interest if you’re responsible for the damage. Liability coverage often comes packaged in home, rental or condo insurance, so review the terms of your existing policy to see how you’re already protected before purchasing additional coverage.

If you want to increase your coverage, contact your insurer to check rates and consider shopping around with other providers to compare insurance costs and find the best deal.

Taylor Medine started blogging about her experiences stretching a dollar in 2013 as a recent college grad. Eventually, that passion grew into a career studying personal finance topics and demystifying them for people like her — the everyday consumer. When she’s not writing, you’ll find her hunting for travel deals or trying (and often failing) at a DIY project.