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Does Homeowners Insurance Cover Personal Injury?

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The short answer is yes. If you have a homeowners insurance policy, you will also have a liability portion that shields you against lawsuits seeking compensation for injuries that happen on your premises and even off of them. To be clear though, your homeowners insurance will only cover "personal" injuries that happen to other people. Your own homeowners insurance cannot cover your own injuries - for that you will need health insurance.

What is Homeowners Liability Insurance?

Homeowners liability insurance is a secondary part of your home insurance policy that protects you from injury lawsuits that happen on your premises or away from them. If you have never heard of it before, that's ok, many people think homeowners insurance is just meant to protect the cost of your home. If someone were to get injured in your home though, and they decided to sue you for damages, which may include hospital fees, lost income and even pain and suffering, your homeowners policy will step in to cover those costs. Policies typically begin at $100,000 worth of coverage but may go up to $1,000,000. There is also medical payments coverage which usually covers between $1,000 and $10,000. Medical payments is a coverage you may use at your own discretion to cover other people's injuries, without them needing to file a claim.

What to Do if Someone is Injured in Your Home

Not every injury will be covered or will need to be covered by your home insurance liability policy. The only injuries that will be covered are those in which a person is injured as a result of a negligence on your part. If for example someone were to slip on a stair you forgot to fix, or your dog were to bite a guest, they may need to go to the hospital. If that is the case, you should call your home insurance company at your earliest convenience. Even if the other person hasn't filed a claim, or say they won't file a claim, you should still tell your company. By telling them right away, you are putting the incident on their radar. Should a lawsuit be filed against you, your company won't be able to challenge the claim, saying you waited too long to report it.

As we say above, this protection is also granted to you and members of your household outside of the home. If your dog were to break loose and bite someone down the street, or if you're walking one day and knock someone over leading them to break a bone, the potential medical bills associated with those injuries will all be covered by the liability portion of your home insurance. The exception to this is if the accident happens in a car. If you were to injure someone in a car accident, you will need a separate car insurance policy with either bodily liability injury protection or personal injury protection. Your homeowner policy will not cover car accident injuries unfortunately. If you intentionally hurt someone as well, like in a fight, those injuries will not be covered by insurance.

How Much Homeowner Liability Insurance Should You Have?

The rule of thumb when it comes to liability insurance is having enough to protect your assets. You want liability coverage to match that amount so no one can come after your assets should you not have enough insurance to pay every fee or bill. For example, if your net worth is $500,000, and you are being sued for $200,000 worth of damage, but only have $100,000 worth of coverage, the person suing can come after your assets to make up for the remaining $100,000 of damages. Your assets may not necessarily be liquid or at your disposal though. $200,000 can be in your 401k that you have been saving for years. If your insurance cannot adequately cover the person's damages however, they can sue you and get the courts to use that 401k money to pay the difference. The point is, you need to figure out your total assets and get liability coverage equal to that amount.

How Much Does Liability Homeowners Insurance Cost

Liability is one of the lower costing parts of your homeowners policy. When we took a look at State Farm policies we found the jump between $100,000 and $300,000 was only a few extra dollars per month. The table below summarizes all of the prices differences between the available amounts of liability insurance.

Liability AmountState Farm Total Monthly Rate
$100,000$57.17
$300,000$59.33
$500,000$61.50
$1,000,000$64.08

To increase your liability homeowners insurance by 10x only costs an extra $7 per month or about $84 per year. The absolute dollar amount will likely change depending on your location and your personal circumstances, but overall you shouldn't expect your rates to change too drastically when you increase the liability portion of your home insurance. Of course you should still shop around for homeowners insurance quotes when you need to renew your policy. Different companies will have different pricing in certain areas.

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