Personal liability coverage is the portion of your homeowners insurance policy that pays for legal, medical, and repair bills if someone is injured or their property is damaged and you’re found legally responsible. You generally want enough personal liability insurance to cover the value of everything you own.
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What does personal liability insurance cover?
Personal liability insurance typically covers the following:
Injuries to guests at your home: Personal liability insurance covers medical bills for guests who are hurt on your property (also known as “bodily injury” in insurance lingo). Types of accidents that might be covered include if your dog bites someone, if a delivery person slips and falls on your icy sidewalk, or if someone gets hurt while using your pool or trampoline.
Damage to your guests’ belongings: Covered property damage might include if your dog destroys your guest’s expensive fur coat or a dead tree in your yard falls onto your neighbor’s house.
Lawsuits and legal fees: If you’re sued for any of the above covered accidents, your home insurance company might cover the cost of an attorney, legal fees, and any settlements you’re required to pay, which might include payments for pain and suffering or lost wages.
Damage or injury caused away from home: If your dog escapes and bites a neighbor down the street or you’re out rollerblading and accidentally hurt a passerby, your personal liability insurance might kick in to cover the injured party’s medical bills if you’re found responsible.
To use your personal liability coverage, you first need to file a claim with your insurance company. For your claim to be accepted, it needs to be proven that your negligence led to the injury or property damage. If negligence can’t be proven, then your insurance company will deny the claim.
When negligence CAN be proven
Say your dog attacks and bites someone walking by your property. That would be a clear case of negligence on your part for not securely leashing your dog. Your insurance would likely approve the claim.
When negligence CAN’T be proven
Say a food delivery person trips over their own feet walking to your front door and injures themself. That would not be a clear case of negligence on your part. Any liability claim would likely be denied by your insurance company.
What does personal liability insurance not cover?
Personal liability insurance typically does not cover any incidents where negligence can’t be proven, as well as the following:
Injuries to you or members of your household: This is typically covered by your health insurance, not the personal liability coverage in your home insurance policy.
Business claims: This includes business-related accidents, property damage that’s caused by your business activities, malpractice lawsuits, or workers compensation. Your business insurance policy might cover these incidents, instead.
Car accidents: Injuries and damage you cause while driving are typically covered by the liability section of your car insurance policy, not your home insurance policy.
Intentional injuries or damage: This includes if you or a member of your household purposely harms a guest or damages their property, including self defense in most cases.
Injuries caused by “dangerous” dog breeds: Many home insurance companies will exclude coverage for accidents caused by a dog breed they deem “dangerous.”
Do I need to go to court if I file a personal liability claim?
Not always — in many cases, personal liability claims will be resolved without the need to go to court.
Lawsuits tend to happen only if …
Your insurance company denies liability for an incident.
You ignore or decline the injured party’s request for your insurance information.
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Why do I need personal liability insurance?
Personal liability insurance is the only way to protect your financial livelihood if you're ever found legally responsible for someone's injury or property damage. If you own a home and other expensive assets, you'll want enough personal liability coverage to cover their total value.
If someone is injured and you’re found liable and you don’t have personal liability coverage, you’d be legally responsible to cover the settlement entirely out of your own pocket.
How much does personal liability insurance cost?
Personal liability insurance typically costs around $8 to $10 a year for every $100,000 in coverage. Standard home insurance companies usually offer between $100,000 and $500,000 in coverage, though some have personal liability limits as high as $1 million.
Cost of personal liability insurance by coverage limit
As you can see in the table below, how much liability coverage you have doesn’t raise your rates all that much. For example, a State Farm home insurance policy with $500,000 in personal liability coverage only costs around $30 more per year than a policy with $100,000 in liability coverage.
Here’s the annual cost of a homeowners insurance policy with $100,000, $300,000, and $500,000 in personal liability coverage for five popular insurance companies:
Company | $100,000 in personal liability coverage | $300,000 in personal liability coverage | $500,000 in personal liability coverage | |
|---|---|---|---|---|
Allstate | $1,572 | $1,596 | $1,645 | |
ASI Progressive | $2,607 | $2,618 | $2,630 | |
Farmers | $1,841 | $1,874 | $1,906 | |
Nationwide | $1,934 | $1,955 | $1,969 | |
State Farm | $2,023 | $2,039 | $2,055 |
How much personal liability insurance should you have?
Most experts recommend that you have $300,000 to $500,000 in personal liability coverage, according to the Insurance Information Institute. [1] In general, you should have enough personal liability insurance to cover the total value of your financial assets — retirement funds, cars, homes — if not more.
Keep in mind a plaintiff can go after all of your personal assets if you don’t have enough personal liability insurance in place, so it’s important that you’re not underinsured — especially since more coverage might not cost you more money.
Let’s take a look at an example.
Say your net worth is $500,000, you have $250,000 in personal liability coverage, and you’re being sued for $400,000 in damages.
Since your insurance company only covers $250,000, the plaintiff can come after your personal assets to cover the remaining $150,000 in damages.
Add more coverage for extra risks on your property
Swimming pools, trampolines, and even treehouses are all potential risks (also known as “attractive nuisances” in insurance lingo) that could result in injury to your guests. If you have any of these on your property, you should strongly consider maxing out your personal liability coverage limits.
Since most insurance companies offer a maximum of $500,000 in personal liability coverage, you might want to purchase a separate personal umbrella policy to increase your coverage limits.
Calculate how much personal liability coverage you need
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What is a personal umbrella policy?
A personal umbrella policy — aka umbrella insurance — is a type of liability coverage that you can purchase in addition to your home insurance. If the personal liability coverage in your homeowners insurance is maxed out during a claim, your personal umbrella policy kicks in to cover the remaining costs.
Personal umbrella policies are generally offered in increments of $1 million — with a maximum limit of $5 million or even $10 million with some companies.
Umbrella policies typically cost around $300 a year for the minimum amount of coverage. If you have over half a million dollars in combined assets, personal umbrella coverage may be well worth it.
Frequently asked questions
What is personal liability insurance for renters?
Personal liability coverage is also included in most renters insurance policies. While tenants generally don’t need as much liability coverage as homeowners, this is still a good safety net for any renter with valuable assets.
If someone is injured and you’re found liable and you don’t have personal liability coverage, you’d be legally responsible to cover the settlement entirely out of your own pocket.
Can I file a liability claim against someone else’s homeowners insurance?
It depends on where you live. In some states, the injured party can file claims with the liable party’s insurer. In other states, liability claims can only be filed by the individual named on the policy. Talk to an insurance expert or attorney to discuss your options.
What is medical payments coverage?
Medical payments coverage is the part of your homeowners policy that covers guests’ injuries if they get hurt on your property — regardless of who's at fault. This coverage is designed to pay for more minor medical expenses, like first aid, X-rays, and ambulance rides.
Methodology: How we determined average personal liability insurance rates
Policygenius has analyzed home insurance rates provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C., for a 40-year-old female homeowner with no claim history, good credit, a $1,000 deductible, and the following coverage limits:
Dwelling:$300,000
Other structures:$30,000
Personal property:$150,000
Loss of use:$60,000
Personal liability:$100,000, $300,000, or $500,000
Medical:$1,000
Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of costs. Your actual quotes may differ.
