If insurance was the town you grew up in, personal liability insurance would be like your best friend. Someone who’s always there for you, someone who can help you get out of a jam, someone who has your back. That’s liability.
If you get sued by someone who broke their ankle on your front porch, personal liability insurance steps in like a superhero and covers the legal bills.
If your poodle bites your neighbor, liability doesn’t say, I told you to keep him on a leash. Instead, it pays your neighbor’s medical bills.
Personal liability insurance is the best protection money can buy. Let’s learn exactly what it is, how it works and how much you need.
What Is Personal Liability Insurance?
Personal liability insurance is a type of homeowners insurance that covers you against lawsuits for bodily injury, property damage that occurs on your property and even dog bites (depending on the breed). Heck, it even covers events that happen off your property (that’s just how powerful it is). It protects you against things you are found liable for.
Purchasing personal liability coverage within your homeowners insurance policy is one of the best buys in the business. It’s affordable, so you can get a lot of it at a reasonable rate.
Don’t confuse homeowners liability insurance with its cousin, liability auto insurance, or its second-cousin, business liability insurance. They’re obviously related, but different (just like siblings).
What Does Personal Liability Insurance Cover?
Personal liability insurance covers four basic things: lawsuits, medical bills, property damage and dog bites.
If a neighbor breaks their hip falling down your stairs, then sues you, the legal fees alone would quickly start sapping your savings. This is where liability kicks in. It covers accidents that happen on your property so you’re not responsible for paying lawyers to defend you in court. It also covers any court awards if you lose. However, your insurance company will only pay out up to certain limits (more on that in a bit).
Liability covers what’s called no-fault medical coverage. This means that if someone is injured at your house, they can send their medical bills to your insurance company. This coverage—also called medical payments coverage—usually starts at $1,000 per person.
If your son is playing at a neighbor’s house and accidentally wrecks their expensive furniture, you’re covered.
Liability also covers you in the event your pets cause damage or bite someone. And the incident can happen on or off your property, which is helpful when Fluffy jumps the fence and starts running around the neighborhood. But even though all dogs go to heaven, not all dogs are covered under home insurance. If you have a breed that’s been flagged as high-risk, your dog won’t be covered (something to remember when you're figuring out how much a new dog will cost you).
Here’s a list of dog breeds insurers won’t touch:
- Pit bulls
- Doberman pinschers
- Great Danes
- German shepherds
- Siberian huskies
- Alaskan malamutes
- Wolf-dog hybrids
- Any mix of these breeds
And remember, liability insurance is just one aspect of your homeowners insurance policy. There are other things your homeowners insurance policy covers that aren’t under the umbrella of liability.
What Isn’t Covered by Personal Liability Insurance?
So far we’ve seen personal liability insurance is pretty awesome. It protects you from a ton of bad things. But there’s another side to the coin.
Personal liability insurance won’t cover the following things:
If you’re found liable for an accident involving vehicles, your home insurance liability won’t help. That’s what auto insurance is for.
If you or a family member purposely cause damage to someone or someone else’s property, don’t expect your insurance company to cover that.
Injuries to You or Your Family
Liability doesn’t cover incidents that happen to you or your family. That’s what your health insurance is for.
Your homeowners insurance liability protection won’t cover any business-related accidents or property damage. Your business insurance should do that.
Protect your home and your budget with the right coverage!
How Much Liability Coverage Do You Need?
Just like trying to figure out how much overall home insurance you need, you might be wondering how much liability coverage you should buy.
Most home insurance plans include a minimum of $100,000 in personal liability coverage. But we recommend having at least $500,000. This might seem like a lot, but hear us out. First, no one sues for $250,000 these days. Second, liability really doesn’t cost that much. So it’s worth it to get a minimum of $500,000.
If you already have a homeowners insurance policy in place, but aren’t sure how much liability you have, check your insurance declaration page. You can find it on your insurance company’s website or app, and it will tell you exactly how much you have.
One last tip: If you have a larger net worth, meaning you have more assets at stake, and more of a likelihood of getting sued, look into umbrella insurance. An umbrella policy kicks in when you reach your policy’s liability limit.
How to Get the Right Coverage
Now that you’re a personal-liability-insurance expert, you’re ready to get set up with the perfect amount of homeowners insurance coverage. But what’s the best way to do this?
Well, you could sift through endless quotes from insurance companies to try to find the exact right level of coverage at the best price. Or . . . maybe there’s a better way.
We recommend working with our network of top insurance agents. They’re part of our Endorsed Local Providers (ELP) program and they can shop the best quotes for you—and for free! They’re RamseyTrusted, too, and can look at your specific situation to find the best plan at the right price.