Personal liability insurance is the part of your renters insurance coverage that protects you if someone brings a claim or lawsuit against you for injury or loss of personal property. A typical renters or tenants insurance policy grants you $100,000 of personal liability coverage to go along with your personal property protection. However, you can typically choose your own limits when purchasing the policy.
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In contrast to the personal property provision of your policy, your liability coverage does not apply to damage related to your own property. Instead, you would only use renters liability coverage if someone else files a claim or sues you for harming them or their property.
When is liability insurance needed?
Personal liability renters insurance gives you financial support if you are accused of or sued for failing to protect another person from a foreseeable risk, resulting in property damage or injury.
For example, let's say your dog bites a passing jogger or a party guest and causes a trip to the hospital. Whether or not the incident takes place on your property, you could be liable for damages if the other person brings a claim against you because you failed to control your dog.
However, you may not necessarily face a lawsuit if someone brings a claim against you. If they decide to file a claim with your insurance provider, they may be issued a denial letter if your insurer determines that you weren't liable for the injury. If this happens, your case will only go to court if the claimant chooses to fight the denial letter.
If you have renters liability coverage, you would not be responsible for paying litigation costs or any other damages — even if you lose a case. Given the high costs of litigation and medical treatment, having renters insurance with good liability coverage could help you avoid a number of financially crippling scenarios.
What does personal liability insurance cover?
Your personal liability insurance covers most claims and lawsuits you might face as a result of your negligence. Common liability claims stem from:
Dog bites. Dog bites are frequently connected to personal liability claims, and the average price of caring for a dog bite is $35,000. Although most canines are covered by your personal liability coverage, some breeds are excluded from renters insurance coverage. If you aren't sure whether your dog is an excluded breed, it’s a good idea to ask your insurer about their rules. Otherwise, your personal liability may not cover damages.
Slip-and-falls. Slip-and-falls might arise when you neglect to protect a house guest from foreseeable danger, such as a wet floor. However, determining fault for slip-and-falls can be tricky because there are many reasons why someone would fall. Although every incident is different, you can take reasonable precautions to ensure no one falls in your home.
Swimming pools. Swimming pools may lead to injuries and accidental drownings, which could in turn lead to a liability claim. As with trampolines, swimming pools are deemed "attractive nuisances" because they can draw in kids who don't have permission to use your property.
Unfortunately, lawsuits often find the owner of the pool at fault. Courts often judge that children can't appreciate the boundaries of private property or understand the danger of using an unsupervised pool. If you own a pool, consider adding a fence around your yard or a gate that locks to keep out uninvited people.
Falling trees. If you're renting a single-family home and fail to maintain the property, a downed tree could lead to a lawsuit if it hurts someone or falls onto your neighbor's property. You should notify your landlord when you think a tree is rotting or poses a fall risk. However, you don't have to worry about this type of liability if you rent in a multiunit complex, since apartment-dwellers usually aren't responsible for building upkeep.
Injured workers. Workers may file a personal injury claim if they hurt themselves while working on your property due to a foreseeable hazard. Fortunately, your personal liability policy covers you if a worker decides to sue. For example, you could be liable if a worker twists his ankle in a hole in your yard that you didn't tell him about.
Your renters liability coverage also protects you from injuries or damage caused by intoxicated house guests, leaks, fires, and libel and slander.
When does personal liability coverage not protect you?
Your tenants liability policy excludes any damages that a car causes, but your auto insurance could protect you from these damages. If you run a business out of your home, your liability coverage would also not apply to any damages that arise from your professional dealings.
Your liability policy also won't cover an accident between two people living in the same house. For example, let's say you and your father run into each other in the kitchen. Some expensive glasses break, and your leg gets cut. Any bodily injuries would be covered by your health insurance, and the broken glassware would be covered by your renters policy's personal property protection.
How much liability coverage do I need?
You should have enough liability coverage to meet the cost of any medical bills and litigation fees that you believe are possible. A typical renters insurance policy comes with $100,000 worth of liability coverage. It may seem like a high number, but it still might not be enough to cover the high cost of an accidental loss of life or a serious injury that occurs on your property. If your home includes a risky feature such as a pool or a trampoline, you may want to increase the amount of liability coverage on your renters policy.
Fortunately, raising your liability coverage is often the cheapest change you can make to your insurance. The average cost of renters insurance is $216 per year. Increasing your renters liability coverage from $100,000 to $300,000 raised the average annual premiums by only 5% to 6%. For this reason, it could be a good idea to have a high liability limit regardless of your risk.
If raising the liability coverage in your renters policy is still not enough for your needs, you can purchase an umbrella policy, which provides liability coverage beyond the bounds of your normal policy.