Personal liability coverage protects you against bodily injury or property damage to other people (or their stuff) as a result of your actions, at your home, and anywhere else.
What is personal liability insurance?
Let’s start from the beginning.
In everyday speak, ‘personal liability’ means that someone is legally responsible for something. In renters and home insurance, it refers to situations of bodily injury or property damage that you’re responsible for. And finally, ‘personal liability coverage’ is something included in your renters or homeowners insurance policy which protects you if you’re legally responsible to pay for something that happened to someone else.
So when would personal liability coverage kick in?
Here are a few scenarios:
- Someone’s injured on your property, and it’s your fault
- You accidentally cause damage to someone else’s stuff, or place
- Someone (or pet) listed on your policy causes damage to someone else
If any of these three things happen, personal liability insurance covers the cost of a lawyer to defend you, and your insurance company will pay the damages you’re responsible for.
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
Situations personal liability coverage will help out with
- When you need a lawyer to defend you in court
- Medical payments to others (over $5K b/c that’s what your medical payments coverage is for)
- Property damage payments
- Damages caused to others by members of your household
- Damages caused to others by your pets
But note: First off, personal liability insurance will only cover personal injury to others, not yourself, or others covered under your policy. Second, your insurance company only covers unintentional situations. So if you get angry and punch someone in the face (ouch!), and he sues you, your liability policy won’t pay for his medical bills, or your legal fees.
What doesn't liability insurance cover?
Here are some things liability insurance doesn’t cover:
- 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 conduct business activity 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
Plus, one of the biggest sources of confusion is whether liability protection 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.
How does personal liability coverage work?
When you purchase a renters or homeowners insurance policy, there are a few main types of coverage included:
- Coverage for your place (if you’re a homeowner, condo owner, etc.)
- Coverage for other structures on your property (for homeowners only)
- Personal property coverage aka contents insurance (at your place, and anywhere else)
- Additional living expenses (if your place becomes uninhabitable)
- Personal liability coverage
Each area has its own coverage limit. So when you customize your renters or home insurance policy to meet your needs, you can select how much coverage you’ll have for each of these categories (within a certain range, of course).
For personal liability insurance, coverage will typically start at $100,000, which means your renters or homeowners insurance company will pay up to $100,000 in legal fees, medical expenses, or damages per liability claim.
If you’d like to increase that policy limit, you can go right ahead! Increasing your coverage amount will probably cause your premium to go up a bit, but no worries – it shouldn’t be too drastic.
You can increase your coverage up to $1M at Lemonade in just about every state except for California, where the max coverage is $500K.
Examples of personal liability coverage
Let’s say you and a family member decide to throw a house party for your best friend’s birthday. All is fine and well, until your klutzy friend slips and falls in your kitchen, twisting his ankle. He heads over to the hospital, receives his medical bills, and decides to sue you (bummer!).
If this happens, your renters or homeowners policy might just cover the costs of his medical bills and your legal fees, all thanks to your personal liability insurance.
Let’s say you take Fido, your pup, to the dog park. He spots his doggy BFF, Rex, and the two start playing. Cute!
Suddenly, out of nowhere, Fido bites Rex!
Rex’s owner takes him to the vet, and sends you his bills. Unfortunately the bite was serious and you are looking at a bill for $25K (gasp!). Luckily, your liability coverage under your renters or home insurance policy can help cover the cost of these bills.