The Lowdown on Liability Coverage

Your complete guide to liability coverage: How it works, what it covers, and how to file a claim with Lemonade.

Team LemonadeTeam Lemonade

Could spilled coconut water cost you $9,000?

If your friend slips and falls because of your spillage, it sure could. That’s because you might be liable – aka, responsible – for their medical bills, lost wages, as well as pain and suffering because of their injury.

But one spill doesn’t have to cost a month’s salary if you have liability coverage. As part of your renters or homeowners insurance policy, liability coverage could pay for these expenses, so you don’t have to.

What is liability coverage, exactly? And how does it work? We’re here to answer all of your burning questions.

What is liability coverage?

Liability coverage can help reimburse you if you (or anyone listed on your policy) 1. accidentally injures someone, or 2. damages property.

Here are some common scenarios where liability coverage could kick in:


  • Someone’s injured on your property, and it’s your fault
  • A person (or pet) listed on your policy accidentally injures another person or pet

Property damage

  • You accidentally cause damage to someone else’s stuff, home, or apartment
  • You accidentally cause damage to your rented apartment or house due to fire, smoke, or explosion

Let’s say a candle tips over and sparks a fire, and the smoke damages your neighbor’s living room furniture. In this case, your liability coverage can help compensate him for his damaged furniture, and the structure of the building.

In fact, fire-related incidents are the most common liability claims we see here at Lemonade. “Around 1 out of every 3 liability claims we receive involves fire damage to someone else’s stuff,” says Lauren S., a BizOps Associate at Lemonade.

But that doesn’t mean every scenario like this is 100% covered. “Like a snowflake, no one claim is the same as the next,” says Lemonade Claims Experience Specialist, Lawrence L.

What does liability coverage cover?

Depending on the details of your claim, your liability coverage can help pay for:

  • Property damage payments
  • Accidental damages to others, caused by you or others on your policy
  • Damages caused to others by your pets
  • Medical payments, and pain and suffering
  • A lawyer to defend you in court

Why would someone need a lawyer?

Let’s say your dog bites your neighbor, Mike. If you don’t give Mike your insurance info (either because you’re uncomfortable doing so, or don’t have the chance to), he might hire a lawyer to send you a letter, letting you know that Mike is pursuing the claim, and will take you to court if you don’t provide your insurance info within 30 days.

If this happens, here’s how to protect yourself:

  • Provide your insurance company with the lawyer’s info, so your insurer can reach out to them on your behalf
  • File a liability claim, and send Mike your claim number and your adjuster’s contact info

What does liability coverage not cover?

While liability coverage offers a host of protections, there are quite a few things that aren’t covered.

One of the biggest sources of confusion is whether liability coverage includes damages to your apartment’s structure: “Around 53% of denied liability claims at Lemonade are related to property damage, because people aren’t completely sure what’s actually covered,” says Lauren.

If you accidentally cause damage to your apartment’s walls, floor, ceiling, or windows due to fire, smoke, or explosion, you are covered- but you’re not covered if it’s due to vandalism, water damage, dog bites, or neglect.

For example, if you try to hang a new mirror on your walls, and the nail accidentally hits a pipe, which bursts and damages your walls and furniture, your walls aren’t covered by your renters insurance, but your furniture is.

What else isn’t covered by liability coverage? Here are some examples:

Property damage

  • You intentionally cause damage to someone’s stuff or place
  • Your car damages someone’s stuff or place (that’s what auto insurance is for)
  • You run a business out of your home, and someone or something is damaged as a result
  • Property that is rented to you is damaged


  • You, or someone else on your policy, is injured
  • Someone is injured on your property and it’s not your fault

If someone is injured in your home and it’s not your fault, your ‘medical payments to others’ coverage on your homeowners or renters insurance policy could pay for their medical bills. And your insurer must still defend you, and determine whether to settle or defend.

But if the injury is your fault, your medical payments to others coverage would kick in first, before your liability coverage kicks in.

Here’s an example: Let’s say your friend trips in your apartment, injures herself, and has to pay $6,000 in medical bills. You have $100,000 in liability coverage, and $5,000 in ‘medical payments to others’ coverage.

If it is your fault, your insurer would pay her $5,000 from your ‘medical payments to others’ coverage, and $1,000 from your personal liability coverage.

If it isn’t your fault, your insurance company would pay her $5,000 from your ‘medical payments to others’ coverage, and she’d need to pay the remaining $1,000.

How can you tell whether an injury is your fault (aka, you were considered negligent)? It depends on the details of the situation, but generally, you’re liable if:

  • You don’t warn your guests of a known hazard
  • You don’t report a hazard to a property manager (if you rent your apartment or home)

“In insurance speak, you’re negligent if you had a duty owed, breached that duty, and as a result, someone was injured or property was damaged,” says James H., the Chief Claims Officer at Lemonade.

If you do report the hazard to the property manager, and they don’t fix it in a reasonable amount of time, your landlord could potentially be responsible.

When is damage caused by my pets covered?

If your pet bites a fellow animal or person- or damages someone else’s property- your liability coverage could kick in. (But if your pet damages your stuff, you’re not covered.)

Some policies don’t cover your dog at all. If your dog has a history of biting, or is categorized as high-risk, your liability coverage may not cover ‘em.

How does liability coverage work?

Liability coverage is included in your basic renters or homeowners insurance policy, alongside coverage for:

  • Your stuff
  • Additional living expenses (if your place becomes uninhabitable)
  • Medical payments to others
  • Your place (if you own a home or condo)
  • Other structures on your property (if you own a home)

When it comes to your liability coverage, there’s no deductible you have to pay (pretty sweet, right?).

When you get a policy, you can choose how much coverage you’d like. You’ll need to ask yourself: How much damage could I pay out-of-pocket in the worst-case scenario, and how much will I need my insurance company to cover?

How much liability coverage do I need?

Personal liability coverage usually starts at $100,000, which means your insurer will pay up to $100,000 for the covered losses you’re responsible for. That may seem like a high number, but it might not be enough to cover the cost of an accidental loss of life or serious injury on your property.

To figure out how much liability coverage you need, first determine how much your stuff is worth. “Liability coverage should be based on how much you own and what type of risks you have, like a dog,” says Erik D., a Claims Experience Advocate at Lemonade. “You should also factor in your liability exposure.”

Meaning, if you live in an apartment building with 200 other units, you have much higher ‘liability exposure’ than someone renting a standalone home would. That’s because if you cause an apartment fire that spreads to the entire building, you’re on the hook for the entire building’s structural damage, as well as damaged stuff, injuries, and relocation costs for everyone living in those 200 units.

Unless you could spare an extra $100,000 in unexpected costs, “you should get $200k-$300k in coverage just in case,” says Erik. “A few extra bucks or so per month to get an extra $100k in liability coverage is probably worth it.”

How do I file a liability claim?

First thing’s first: If something happens that might involve your liability coverage, file a claim right away- whether you’re the person who caused the damage, or not. “Try to collect the contact info from all of the involved parties and get photos of the damage as early as you can,” says Mike A., a Claims Experience Advocate at Lemonade.

That way,  your insurance company can gather info on the incident as early as possible. “It’s important for us to get statements from everyone while it’s fresh in their minds, and facts and photos of the initial damage don’t change,” Erik says.

To file a claim with Lemonade, follow these steps:

1. Open the Lemonade app on your phone. If you don’t have it, download it and sign in with the email you used when getting your Lemonade policy.

2. Hit the pink ‘claim’ button in the top right-hand corner.

3. Meet our claims expert, AI Jim. He’ll verify your contact info, and ask for more details about what happened.

4. Digitally sign a Pledge of Honor to verify everything you tell us about your claim is truthful and honest.

5. Explain exactly what happened in a short video recording. Pretend you’re talking to a friend, and let us know the details, such as when and where the incident happened.

6. Provide the contact info of the other party involved, as well as any other photos or records of the damage.

7. Check to make sure all of the information is accurate in the full summary of the information you provided.

Btw, when you file a liability claim, there may be a chance that your insurance company will need to communicate with the insurer or other party involved. That could happen if you need funds right away to repair damage caused by another party.

For example, if your neighbor causes fire damage to your apartment and stuff, and you can’t wait for their insurer to evaluate the claim and pay you back, you can file a claim with your insurance company, asking for funds to fix the damage. In this case, your insurance company will contact your neighbor’s insurer for reimbursement.

Another instance would be if two people are liable for a claim. So if your friend walks your dog, and your dog bites someone, both you and your friend will be liable. Therefore, both of your insurance companies would need to communicate with each other.

Anything else I need to know?

That about covers it! (No pun intended.)

And if you’re feeling curious  to learn even more about your insurance coverage (kudos!), here’s everything you need to know about personal property, dwelling, loss of use, and other structures coverage. Happy reading!

A few quick words, because we <3 our lawyers: This post is general in nature, and any statement in it doesn’t alter the terms, conditions, exclusions, or limitations of the policies issued, which differ according to your state of residence. You’re encouraged to discuss your specific circumstances with your own professional advisors. The purpose of this post is merely to provide you with info and insights you can use to make such discussions more productive! Naturally, all comments by, or references to, third parties represent their own views, and Lemonade assumes no responsibility for them. Coverage may not be available in all states. Please note that statements about coverages, policy management, claims processes, Giveback, and customer support apply to policies underwritten by Lemonade Insurance Company or Metromile Insurance Company, a Lemonade company, sold by Lemonade Insurance Agency, LLC.  The statements do not apply to policies underwritten by other carriers.


Please note: Lemonade articles and other editorial content are meant for educational purposes only, and should not be relied upon instead of professional legal, insurance or financial advice. The content of these educational articles does not alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade, which differ according to your state of residence. While we regularly review previously published content to ensure it is accurate and up-to-date, there may be instances in which legal conditions or policy details have changed since publication. Any hypothetical examples used in Lemonade editorial content are purely expositional. Hypothetical examples do not alter or bind Lemonade to any application of your insurance policy to the particular facts and circumstances of any actual claim.