How Does Renters Insurance Cover Personal Liability?

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Personal liability protection is one of three distinct coverages included in renters insurance policies. It covers the cost of a variety of incidents and damages that a renter could be responsible for, as well as the cost of a lawsuit filed against them. If you're a tenant, you should consider purchasing renters insurance as protection from the financial costs of these events. Below are examples of what renters personal liability protection will cover, as well as how the coverage itself works.

What Renters Insurance Personal Liability Covers

Renters insurance personal liability coverage pays for damages related to bodily injury and personal property when a policyholder is at fault or negligent. It covers a wide variety of incidents that might lead to a personal liability claim. Here are some examples of common liability claims.

Dog bites are among the most frequent personal liability claims. While a number of dog breeds are excluded from renters insurance coverage, most canines and other pets are covered by a renter’s personal liability protection. In the event a dog bites a visitor, the owner might be liable for any resulting medical bills and damages. There are over 18,000 dog bite claims a year in the U.S. with an average cost per claim of approximately $35,000.

Slips and falls are probably what comes to mind when most people think of personal liability claims. Anything that might be considered a foreseeable risk—that you, a renter, has not remedied or warned guests about—is something you could be liable for. The liability portion of a renters insurance policy can cover this risk.

Swimming pool injuries and accidental drownings are frequently found to be the fault of the owner and are covered by personal liability coverage. Like trampolines, swimming pools are considered an attractive nuisance, meaning children are tempted to use it with or without permission.

This only applies to tenants renting a single-family home with a swimming pool. Renters who live in an apartment building, or any other community with a shared swimming pool, are not individually responsible for the pool. Similar to condo boards, the property management would be liable for a swimming pool accessible to all tenants.

Falling trees might also cause damage that a renter could be liable for. For renters in multi-unit buildings, this isn’t something they personally need to worry about. But if you're renting a single-family home, you'd generally be responsible for upkeep of the rental property—that includes notifying your landlord of any potential hazards, such as a damaged or diseased tree. If a tree collapses and destroys a neighbor’s home or personal property, the renter might be found negligent if they hadn’t notified the property owner.

Intoxicated guests are a liability to a host. If you serve alcohol at your home, you can be held responsible for any harm that might occur to intoxicated guests, other parties, or any personal property stemming from their drinking. Personal liability protection will pay for bodily injuries, property damage or death benefits related to an incident.

Injured workers are also covered under a renter’s personal liability protection. A number of different people could be defined as a worker and it is the responsibility of the renter to protect them from any foreseeable risks on their property. For example, if there is a hole or any other hazard in your garden, it's your responsibility to notify any hired help working in the garden of that hazard.

How Personal Liability Works in Renters Insurance Policies

The costs associated with third party liability claims or lawsuits can be high, which is why this part of renters insurance is so valuable. Renters insurance is affordable compared to the average cost of homeowners insurance and almost all renters policies come with at least $100,000 of liability protection.

Any renter who needs more protection should gather quotes from multiple renters insurance companies and compare the costs of higher liability limits. The small investment in a higher personal liability limit could be extremely beneficial, depending on an individual's risks and assets at stake. Without coverage, the costs to treat injuries, repair or replace property, and legal fees can easily reach a level that would be financially devastating to a renter. Some third party claims and lawsuits also seek money for lost wages due to an injury, if it caused the claimant to miss work or hurt their capacity to work in the future.

To cover those expenses, a renters insurance policyholder can file a “first party” liability claim with their insurance company. Most of these situations will unfold in the following steps.

The policyholder notifies their insurance company of a potential claim

Policyholders should notify their insurance company of a claim, or potential claim, as soon as “practicable” (or as possible). For example, if a visitor falls and is injured inside a renter’s home, or a renter’s dog bites someone, it is the responsibility of the tenant to tell their insurance company shortly after it happens—the same day or the next.

There is typically a window of days after an incident occurs that it must reported, otherwise a renter’s personal liability claim can be denied. The exception to this would be if a renter was unaware of an injury in their home, or damage they caused, and did not know a lawsuit had been filed against them until well after the event took place.

The injured party files a claim or lawsuit

Once a renter notifies their insurance company, one of two things will happen: Either the party that was injured, or whose property was damaged, will file a “third party” claim with the renter’s insurer, or they will file a lawsuit against the renter. In both cases, a renter’s personal liability protection will pay for expenses and damages.

In both circumstances (a third party filing a claim or lawsuit against the renter) the damaged party must prove the tenant was responsible or negligent. Then, the damaged party must provide evidence of the expenses they incurred. Proof of their expenses might include medical records, bill receipts, lost wage verification, policy reports or witness statements to support the claim or lawsuit.

Generally, the money a renter’s insurance company pays out is never seen by the policyholder. Insurance companies usually pay out a claim or settlement directly to the damaged party. Policyholders are not responsible for holding or delivering those funds.

Beyond providing the necessary information related to a case, cooperating with any investigation and possibly appearing in court, policyholders don’t have to do much when it comes to personal liability claims.

When Is A Renter Considered Negligent?

Generally, a tenant is considered negligent if they fail to protect an invitee (someone invited into their home or apartment) from a foreseeable risk. For example, if they failed to clean up or warn a visitor of water on a slippery floor, and the visitor falls as a result, the tenant could be considered negligent.

Negligence is difficult to define because every circumstance involving a bodily injury or damage to personal property is different. In the case of water on the floor, there are many variables that might lead a judge or a majority of jurors to conclude a policyholder was negligent or not.

Incidents Excluded From Personal Liability Protection

A small list of things are excluded from personal liability protection of renters insurance. Although most dogs are covered by liability protection, certain dog breeds are excluded. In fact, some insurers won’t even insure a tenant or homeowner who own certain breeds, such as pit bulls. It’s a good idea to ask your insurer about their rules before purchasing a dog so they don't cancel or decide not to renew your policy. Additionally, if you happen to own an exotic pet—such as a reptile or monkey—it's also unlikely to be covered under your liability policy.

Trespassers are excluded from personal liability protection, meaning if they are injured on your property, they are not eligible to file a claim against you. If a burglar injures his or herself breaking into your home, your renters insurance is not going to cover their injuries. Intentional harm to others, whether it is a bodily injury or to their personal property, is also excluded from coverage. If a renter intentionally injures someone, their insurer is not going to help them cover those damages, as personal liability protection only extends to accidental injuries.

Renters insurance will not cover any damages caused by an automobile—that’s what auto insurance is for—and it also won’t cover any harm as a consequence of any professional services. For example, if someone operates a business in their home, their personal liability coverage will not cover any damages related to that business.

If any permanent inhabitants of a home injure one another or destroy each other’s property, their renter’s insurance personal liability won’t cover those damages, either. Bodily injuries would fall under health insurance coverage and damage to belongings under the personal property protection of either renters or homeowners insurance.

Renters Insurance Liability And Home-Sharing

The personal liability protection of a renters insurance policy will generally cover any claims or lawsuits made by a home-sharing service guest. For example, if a renter temporarily leases their apartment using Airbnb and their visitor falls and injures his or herself, their personal liability protection would cover any affiliated expenses.

Home-sharing services also include liability insurance to protect a host in the event of a claim or lawsuit against them. Airbnb’s Host protection Insurance offers up to $1 million per incident of primary liability protection in the event of third party claims.

There are some caveats to this coverage that renters need to understand. Airbnb’s Host Protection Insurance, for example, does not cover a renter’s personal personal property—in other words, it is not meant to take the place of renters insurance. Tenants still need a renters insurance policy.

To ensure your renters insurance company doesn’t deny any claims or cancel your policy, make sure your home-sharing activity is compliant with your policy. In circumstances when a renter (or homeowner) are hosting visitors more than a certain numbers of days each year, or receiving more than $2,000 in annual revenue from temporary guests, the activity could be considered commercial and grounds for denying a claim.

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Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.