Is personal liability home insurance worth it?

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

• Does personal liability cover me for breaking the law?

  No. Liability coverage typically has an exclusion if there’s injuries or damages as a result of intentional or criminal acts.

• Is every personal liability coverage the same?

  Not quite. Some personal liability policies are much broader than others. Some will cover you for things such as personal injury, which is coverage for defamation and includes both libel and slander.

• Does my personal liability cover me if I intentionally injure someone while defending my property or other people?

  You’ll need to read the details of your policy. Still, many policies will cover you if you use reasonable force to defend your property or other people. For example, if someone breaks into your home and you injure them using reasonable force to protect your house, you’d be covered under your personal liability if there was a lawsuit filed against you.

• Is personal liability limited to acts that happen on my property?

  No, personal liability coverage can provide you coverage anywhere in the world. The only caveat is that the lawsuit must be brought against you within the US. There are also exclusions for other property that you own that isn’t specifically insured.

• Can I use my own lawyer if I'm sued?

  No, the insurance company will handle your defense and settlement disputes. This means that you won’t be able to employ your own attorney to defend you in the lawsuit.