Personal liability refers to 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 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 will cover the cost of a lawyer to defend you, and pay the damages you’re responsible for.
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 will only cover bodily injury to others, not yourself, or others covered under your policy. Second, it only covers unintentional situations. So if you get angry and punch someone in the face (ouch!), and he sues you, your liability coverage won’t pay for his medical bills, or your legal fees.
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 (at your place, and anywhere else)
- Additional living expenses (if your place becomes uninhabitable)
- Personal liability coverage
Each coverage area has its own limits. So when you customize your 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, coverage will typically start at $100,000, which means your insurance company will pay up to $100,000 in legal fees, medical bills, or damages per claim.
If you’d like to increase that coverage 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 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 insurance policy might just cover the costs of his medical bills and your legal fees, all thanks to your personal liability coverage.
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 homeowners insurance policy can help cover the cost of these bills.