What is Renters Insurance Liability Coverage?

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Renters insurance, in addition to insuring your belongings, also grants you protection from liability charges brought against you. Often underestimated in importance, the liability portion of your renters insurance can shield you from numerous accidents that can happen both inside and outside your home.

Renters Liability Coverage Defined

Put simply, the liability portion of your renters insurance policy is meant to give you financial support if you are sued for any sort of medical or property damage you cause to another person. This section of your policy does not protect your belongings in any sort of way. A liability policy as a renter may seem unnecessary, but there are actually numerous ways in which you can be held liable for damages. The most common are dog bites. If you have a dog, and they bite someone, regardless of in our outside your home, your renters insurance policy would actually cover you for any damages you are being sued for. Common liability cases include:

  • Dog bites
  • General pet damage
  • Slip and fall
  • Causing a leak or fire in another residence
  • Accidentally injuring another person
  • Libel

Even if you are being sued for libel or slander, your renters insurance policy's liability portion can step in to cover your legal costs and/or settlement. The only thing your renters liability section will not cover is any damage you cause in your automobile. Any car damage will need to be handled by your car insurance. You also won't be covered if what you did was intentional or illegal.

How Much Does Renters Liability Cover You For?

The standard amount for most renters policies is $100,000 in liability coverage. While that may seem like a lot, for many it will not an adequate amount of protection when you consider the costs of medical bills and legal fees. According to the Insurance Information Institute, the average dog bite claim was $32,000 in 2015. In certain states like New York, it was as high as $50,000. Being just an average, there is a solid chance a bad dog bite claim can go over the $100,000 limits afforded on a standard policy.

Luckily, you can raise the liability portion of your policy. We would recommend renters get as much liability to cover the assets they hold. Renters who are making above $100,000 a year will probably want $300,000 to $500,000 in liability coverage. For those making over $300,000 per year, should probably get the highest limits available and even consider getting an umbrella policy.

On the other hand, if you make less than those amounts, for example you are a non-dependent student, you should be ok going with $100,000 in coverage. Essentially, it is unlikely you would be sued for an amount you simply don't or won't have soon. The only exception for that is if you are still a dependent of your parent (and they make more than $100,000) or will be making that amount in the near future.

Then again, the liability portion is the cheapest part of your renters policy. To increase from $100,000 to $500,000 worth of coverage will likely only cost a few extra dollars per month. Considering the extra coverage you get, it may be worth it no matter your income.

What Happens if You are Sued?

If another person feels you are responsible for their medical or property damage bills, they will file a claim through your insurance company. Do not withhold any of that information. Be forthright with who your insurer is. The next thing you need to do is inform your renters insurance company.

If you wait too long, you can throw suspicion over the claim and possibly push your company to not take your case. You should be open with your insurer, telling them every detail of the incidence. Do not exclude any important points. Once that is over they will send an adjuster to investigate. The adjuster will collect statements and evidence of the incident and form a report.

If you are not found liable then your company will send the claimant a denial letter. If you are found liable, the insurance company will then try to reach a settlement with the person who filed the claim. Several things can happen next. Either the claimant accepts the denial offer (if you are not liable) or accepts the settlement (if you are liable). If either is unacceptable to the claimant, they can then decide to file a lawsuit.

Do not worry though, your insurance company will still stick with you and provide a lawyer. They will try as hard as they can to settle the matter out of court. Going to court is expensive and time consuming, and it may be beneficial for both plaintiff and defendant to accept a smaller settlement. That is not to say though that it may go to court. If it does, all of the associated legal fees will be paid for. If you lose the case in the court, your liability insurance will pay for the settlement.

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