Personal Liability Homeowners Insurance

Personal liability coverage is a standard part of every homeowners insurance policy. It provides financial protection in case you unintentionally injure someone or damage their property. Protection extends beyond your home; if you accidentally injure someone at a park or damage a neighbor's belongings while visiting, your policy responds.

For instance, it pays for: 

• Legal defense fees
• Medical expenses for others
• Property damage to others
• Settlement costs/judgments
• Lost wages for injured parties
• Death benefits
• Injury caused away from home
• Court-related costs

Personal liability coverage can offer financial protection from several common situations. Here's what home insurance covers in personal liability:

Because home insurance covers sudden and accidental events, certain liability claims aren't covered, such as:

Personal liability and medical payments coverage work together in your homeowners policy, but serve different purposes. Medical payments coverage (MedPay) pays for minor injuries to guests regardless of who's at fault, with limits of around $1,000 to $5,000. This coverage handles small incidents quickly without requiring a lawsuit.
Personal liability coverage kicks in when injuries are serious or when you're found legally responsible for damage. It covers larger medical bills, legal defense costs and settlements that exceed medical payment limits. Medical payments coverage applies when you need immediate help for minor accidents, while personal liability protects you from major financial claims.

Personal liability coverage is automatically included in most standard homeowners insurance policies. If you’re just about to buy coverage, follow these steps:

Match your personal liability limits to your total net worth at a minimum. If you own assets worth $400,000 (including home equity, savings and investments), carry at least $400,000 in liability coverage. This prevents a lawsuit from wiping out everything you've built.

High-risk factors warrant higher limits. If you own a pool, host frequent parties, own certain dog breeds or engage in activities like hunting, consider $500,000 to $1 million in coverage. For assets exceeding your homeowners liability limits, umbrella insurance provides additional protection at a relatively low cost.

If your current personal liability coverage isn’t enough, you can easily increase your limit for added protection. Review your coverage annually as your financial situation changes. Growing home equity, increased savings or new assets all increase your liability exposure.

Choosing the right amount of personal liability coverage depends on your lifestyle, risk factors and financial situation. Here are key factors to evaluate:

• Potential Accident Risks: Features on your property that increase the chance of injuries (e.g., swimming pool, trampoline, treehouse, certain dog breeds).
• Hobbies and Activities: Activities that could put others at risk (e.g., skiing, hunting, boating, surfing).
• Hosting and Social Events: Frequent gatherings or large events that raise the risk of accidents and lawsuits.
• Tolerance for Risk: Your comfort level with financial exposure versus higher liability limits for peace of mind.
• Total Value of Your Assets: Home, savings, investments and other assets that could be at risk if damages exceed your coverage.

Personal liability coverage protects your assets when you're held legally responsible for injuring someone or damaging their property. Coverage handles legal defense, medical expenses, lost wages and settlements both at home and away from it. Intentional harm, auto accidents, business-related claims and injuries to household members aren't covered.
Standard homeowners policies include $100,000 to $500,000 in liability coverage, but your limits should match your net worth at a minimum. Review your liability limits annually as your assets grow. Consider umbrella insurance if your net worth exceeds your homeowners liability limits.

These answers to common questions help you understand personal liability coverage limits, exclusions and when additional protection makes sense.