Bringing a new family dog into your home can bring joy and companionship. But what if your new dog bites a neighbor? If your neighbor sues you for the injuries, you could end up responsible for paying a pile of medical and legal bills.
Homeowners insurance policies include personal liability coverage, which pays for these types of incidents, plus the cost of your legal defense if you’re sued. Understanding the personal liability coverage in your homeowners insurance policy can help you ensure you have the appropriate amount of coverage.
What Is Personal Liability Coverage?
Personal liability coverage, which is part of homeowners insurance, covers accidental injuries and property damage that you or other members of your household do to others.
For example, let’s say someone slips and falls down a flight of stairs in your home and then sues you. Personal liability coverage pays for lawsuit judgments, settlements and legal bills, up to your liability coverage amount.
Examples of common claims include:
- Medical bills for someone injured at your home.
- Lost wages of someone injured at your home who is now unable to work due to the incident.
- Problems that happen away from home but that you’re responsible for—such as an accidental injury that your child causes to another child on the playground.
- Legal costs if someone sues you.
- A death benefit to a family whose loved one had a fatal accident at your home for which you’re legally liable.
The personal liability coverage within home insurance does not cover vehicle-related injuries you cause to other people. That falls under the liability portion of your car insurance.
Do You Need Additional Liability Insurance?
If you have assets and savings, you can be an attractive lawsuit target. Other factors can also boost your chances of getting sued, such as:
- Your home has a dog, swimming pool, pond or trampoline.
- You own horses or other large animals.
- You host large gatherings in your home.
- You serve on a non-profit board.
Most homeowners insurance policies provide at least $100,000 in personal liability coverage. But that can quickly be exhausted if someone files a big lawsuit against you. Consider raising your liability coverage to $300,000 or $500,000.
Also consider buying umbrella insurance from your homeowners insurance company. Umbrella coverage is a good way to add more liability insurance inexpensively to both your auto and home insurance policies. Umbrella coverage limits generally start at $1 million.
A lawsuit can quickly drain your bank account. With this in mind, check the current liability coverage amount in your home insurance policy and any umbrella policy that you have. If the total liability amount is less than your net worth, or what you could lose in a lawsuit, it’s probably time to increase your coverage.
What Does Personal Liability Cover?
Personal liability home insurance covers injuries to others that you or your household members accidentally cause. It also pays if you or your household members accidentally damage someone else’s property. If your pet injures someone, that’s also usually covered by personal liability insurance.
Injuries you and your family cause away from home
Personal liability home insurance covers injuries you and your family members cause to others even when you’re away from home. If, for instance, you or your children are playing ball in the park and accidentally injure someone, your personal liability insurance can cover the person’s medical bills and pay for legal costs if you’re sued, up to your liability policy limit.
Injuries on your property
Personal liability covers you if someone gets hurt on your property. That may include someone tripping on your walkway and breaking an arm. It could also pay out if a framed picture on a wall falls and crashes onto a visitor’s head.
Injuries caused by your pet
Personal liability helps if your pet causes an injury to another person. For example, if a guest is injured because your dog jumps up on them and knocks them down, your personal liability insurance can pay the person’s medical bills.
Personal liability insurance can also cover medical bills if your dog bites someone. Certain dog breeds are banned by some home insurance companies. This means the dog may be excluded from liability coverage, or that the home insurance company won’t sell you a policy at all.
Damage caused by someone in your household
Accidental property damage you or your family cause to others is covered under personal liability. For example, if your child breaks a neighbor’s window while playing baseball in the yard, personal liability covers the damage up to your policy limit.
What Doesn’t Personal Liability Cover?
Personal liability home insurance won’t cover car accidents, intentional acts you do, injuries to you or your family, or business liability problems.
Car accident claims fall under your car insurance.
For example, liability car insurance covers a car accident where you cause injuries or property damage to someone else. If you want coverage to repair or replace your own car due to problems like car accidents, theft, vandalism, severe weather and other types of non-crash problems, you’ll need to buy collision and comprehensive insurance.
Similar to other types of insurance, intentional acts aren’t covered by home insurance. For example, if you purposely injure someone, your homeowners insurance won’t pay their medical bills. But you’ll still personally be on the hook for the bills.
Injury to people within your household
Personal liability doesn’t cover injuries to you and people in your household. For example, if you cut your hand while preparing dinner, your health insurance would cover the medical bills.
A home insurance policy’s personal liability coverage doesn’t cover problems that arise out of business activities. For example, if you run a woodworking business out of your garage and an employee cuts their hand, your home insurance won’t cover their medical bills. Likewise, if a customer trips while visiting your business, you would not be eligible to file a personal liability home insurance claim.
For these cases, you would need general liability insurance, which is a form of small business insurance and covers accidental injuries and property damage to others, as well as other types of problems (such as copyright infringement and reputational harm).