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Is personal liability home insurance worth it?

Liability is one of the most important types of home coverage, and it’s automatically included in most policies.

Personal liability insurance is included in most standard homeowners policies. It provides coverage from lawsuits against you or your household family members if you're legally responsible for someone else's injuries or property damage. Considering that coverage starts at $100,000, it's also the part of your home insurance policy where you receive the most bang for your buck.

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What is personal liability insurance?

Personal liability coverage kicks in when somebody files a lawsuit against you for injuries or property damage that they feel you’re responsible for. Some personal liability policies will also cover you for personal injury, which can protect you from situations like making unintentionally harmful and false statements about somebody else.

How does personal liability insurance work?

With a personal liability claim, the insurance company will assume full control of the legal defense. The company will use its own attorneys and will be responsible for handling the lawsuit or settlement. It will only involve you if it needs additional information from you or if the lawsuit goes to court.

This coverage also provides the full cost of defense in case the claim does go to court. Many insurance policies will cover this expense in addition to your policy limits. Even if there is never an actual court case or trial, your personal liability coverage will pay for the damages that you’re legally obligated to pay.

The standard amount is usually $100,000 in coverage, though this can be raised in $100,000 increments up to $500,000 or $1 million for an additional cost.

Personal liability insurance in action

Mary is sued when a contractor injures himself while painting her home. She has $300,000 in liability coverage through her home insurance policy. The court case drags on for a long time, which costs her insurer $2 million in legal fees before it’s settled for $200,000. Her insurance company pays the $2 million in defense costs and $200,000 in settlement costs.

Is personal liability insurance worth it?

Yes, personal liability insurance is worth the money. Most standard home insurance policies include at least $100,000 in liability coverage, meaning you can’t buy the policy without buying at least $100,000 in liability coverage.

Liability insurance is also one of the cheapest parts of your policy. If you change your quote to $300,000 or $500,000 in personal liability coverage, you’ll likely see an annual increase of less than $100.

If you have more than $500,000 in assets, you might want to consider buying a personal umbrella policy too, which provides additional liability coverage starting at $1 million.

What’s not covered by personal liability insurance?

There are a few exclusions to personal liability coverage, but almost all of these exclusions can be covered under a different insurance policy.

  • Intentionally harmful or criminal acts
  • Property damage to your own property, covered by your home insurance’s property section
  • Liability claims related to business pursuits, covered by a business or commercial insurance policy
  • Liability claims related to motor vehicles, watercraft and aircraft covered by car insurance, boat insurance or airplane insurance
  • Liability claims relating to your workplace, covered by either worker’s compensation insurance or employment practices liability insurance
  • Liability claims caused by a dog breed that’s specifically excluded from your policy

Bottom line

Personal liability coverage is typically included as part of your home insurance policy. It covers you for lawsuits that could be brought against you if you’re unintentionally responsible for someone else’s injuries or property damage. It also covers defense costs in case the lawsuit goes to court.

To find the best liability coverage and insurance options for your home and family, compare home insurance.

Common questions about personal liability insurance

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