What is personal liability insurance?

What is personal liability coverage?

Personal liability coverage, also known as Coverage E, can be found in Section II of your home insurance policy. You can also find your liability insurance limit listed on your policy’s declarations page. Personal liability coverage provides financial protection if you or members of your household are found at fault or negligent for bodily injury caused to someone else or for damage to the property of others. Most renters insurance policies also include a layer of liability insurance. 

When you file a liability claim, “the other guy” is paid — not you. Liability insurance can help the insured pay for bodily injury and property damage losses that happen to another person that the insured is legally liable for. For example, if you’re throwing a party and a guest breaks their leg on a broken porch step, they may sue you. Your personal liability can help cover the cost of your legal defense lawsuit, the guests’s lost wages, pain and suffering and other expenses up to your policy limits. 

Medical payments coverage, Coverage F, is also usually lumped together with personal liability insurance. Also known as guest medical coverage, this coverage can help pay for a guest’s medical bills regardless of negligence. Meaning, it doesn’t matter who is at fault for the injuries, your policy pays the other person regardless. Typically, medical payments coverage is capped at $1,000 to $5,000 per person, per incident, but you can find exact limits on your policy’s declarations page.

What does personal liability insurance cover?

Personal liability insurance kicks in to help with certain expenses if you are found negligent for someone else’s injuries. These expenses include: 

• Pain and suffering 
• Lost wages
• Death benefits 
• Bodily injury 
• Property damage 

Incidents covered by personal liability may include, but are not limited to, the following scenarios:

• A guest injures themselves on your property
• Your dog bites a guest or passerby (some companies exclude liability coverage for certain dog breeds or dogs with a history of aggressive behavior)
• Damage to a guest’s property (in certain circumstances)
• Injuries or death occurs on your premises, such as incidents related to the use of a swimming pool or trampoline (some companies place specific restrictions on coverage for these items)
• Someone slips and falls on your icy driveway or sidewalk and is injured

Liability coverage can also apply away from your home’s location. If your dog gets loose on a walk in your neighborhood and knocks someone to the ground, injuring them, your liability coverage may still cover you even though you were not at home. Or, if you open your umbrella on a crowded street and poke someone in the eye, your home insurance liability may help in that case as well.

What is not covered by personal liability coverage?

Your liability insurance won’t protect you from everything. If you’re doing something against the law, like selling illegal drugs or abusing someone else, the liability portion of your home insurance won’t help you. 

Personal liability insurance coverage also does not cover intentional damage. If you get into a fight with your neighbor, punch them in the face and they sue you, you would have to shoulder the cost of that lawsuit on your own. Other liability exclusions include: 

• Liability assumed through a contract 
• Personal injury, like a slander or libel lawsuit 
• Bodily injury or property damage stemming from a business pursuit 
• Acts of war, including insurrection and rebellion, by the insured 
• Car accidents (these would be covered by your auto policy) 
• Liability stemming from the use or ownership of aircraft and watercraft 

How to get personal liability insurance

If you have an active homeowners insurance policy or a renters policy, check your personal liability coverage and limits listed on your policy's declarations page. As your net worth or the worth of your home and belongings increase, contact your insurance agent to make sure that you have adequate coverage in place in the event of personal liability claims.

To receive personal liability insurance coverage, you can either:

1. Have a homeowners insurance policy. Standard homeowners, condominium and renters insurance policies come with a certain amount of personal liability insurance. The policy limits can be increased in specific increments.
2. Have a standalone personal liability policy. If you do not have a property insurance policy but still want personal liability coverage, you may be able to purchase an umbrella insurance policy. However, note that FAIR Plans typically do not include liability coverage or include extremely low limits.

How much personal liability coverage do I need?

Most standard homeowners policies offer $100,000 to $500,000 in personal liability coverage. It may be hard to imagine exhausting your homeowner’s insurance liability limit, but costs can add up quickly if someone is injured. 

Your liability coverage protects you in more ways than one. If your child accidentally burns someone else’s house down, you could be liable for a substantial amount in property damage and personal injury claims. In such a situation, a lawsuit could wipe you out financially, including your savings, your home’s equity and your assets.

To determine the right amount of personal liability coverage for your needs, consider your financial situation and speak with a licensed insurance agent. Depending on the assets you want to protect, it can be beneficial to consider adding excess liability or umbrella insurance coverage.

How much does personal liability insurance cost?

As of September 2024, the average cost of a homeowners insurance policy in the U.S. is $2,285 per year for $300,000 in dwelling coverage. This includes $500,000 in personal liability coverage. The amount and percentage that pays for the personal liability coverage portion of your policy depend on your coverage limits and where you live. For example, you will generally pay more for a policy with $500,000 in liability coverage than a policy with $100,000 in liability coverage.

Similarly, the cost of an umbrella policy will depend on how much coverage you purchase. In general, it costs an average of $400 per year for $1 million in umbrella coverage. 

Learn more: Affordable home insurance companies

Who needs personal liability coverage?

If you are responsible for your living expenses or have assets such as a home, savings or investments, you might want to consider adding some form of personal liability insurance to protect yourself financially. To help determine coverage amounts, add up your net worth and the value of your assets. Homeowners insurance personal liability coverage limits typically range from $100,000 to $500,000. If you have a high net worth and more assets, consider increasing your personal liability coverage or purchasing an umbrella policy.

Benefits of personal liability insurance

Liability insurance is designed to help protect your finances if you are found negligent for another’s injuries or damage to the property of others. Medical bills can add up, but when you add on the cost of legal representation, pain and suffering, and lost wages, the costs can increase even faster. Liability coverage is a layer of protection to help safeguard your finances from that fallout. Some benefits of this financial protection include:

• Paying for legal costs: Personal liability could help pay for legal counsel to represent you, litigation or settlement costs.
• Extending coverage for everyone in your home: This includes family members and any pets or animals kept in the home unless specifically excluded.
• Acting as a financial buffer: Without this coverage, your out-of-pocket expenses could add up quickly. Your savings, house, vehicles and other assets could be at risk if you do not have the coverage to compensate the injured or damaged party adequately.

Frequently asked questions