What is civil liability in home insurance?

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Liability insurance is one of the six main types of coverage offered by home insurance.

Here’s an overview of what the liability portion of your home insurance policy covers, what’s excluded, and how much coverage you need to best protect you and your family:

What is Personal Liability?

As you can probably guess from the name, personal liability coverage is intended to cover expenses related to injury or damage for which you (or members of your household) are deemed responsible. The liability coverage included in your home insurance policy protects you in the event of lawsuits that claim you, a family member or even a pet for bodily injury or property damage.

These coverage limits can pay to defend you in court against a lawsuit or to pay damages awarded to someone else as a result of a lawsuit. The maximum amount of personal liability coverage depends on your state and the limits you choose when you purchase your policy.

If you’re looking for home insurance quotes with liability coverage, Credible can help you get started.

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How does personal liability work?

If an eligible loss occurs, the coverage of this policy will kick in to pay for a range of different expenses, up to the policy limit. This could include the other party’s medical bills, the cost of pursuing your case, or even the amount awarded to an injured party, and would be applied before you are forced to dip into other assets to cover those damages. .

To verify: Everything you need to know about home insurance claims

What does personal liability insurance cover?

Of course, policies may differ from one insurer to another, but in general, liability insurance covers:

  • Medical expenses related to someone’s injury that occurs on your property or as a result of your actions outside the home.
  • The cost of defending you against litigation if you are sued in court.
  • Damages awarded against you, up to the limits of your policy.
  • Material or bodily damage caused by your pets.
For example: Situations where your home insurance policy’s liability coverage would likely come into play include:
  • A friend comes to your house to visit and slips on your front steps, injuring his back
  • Your kid plays baseball in the front yard and hits a home run straight into your neighbor’s windshield
  • Your dog escapes your yard and ends up biting someone for a walk (or even their dog)
  • You pass someone at the local bakery, spill hot coffee on their arm and inflict second degree burns

What does private liability insurance not cover?

Of course, this personal liability insurance does not extend to all possible situations, especially if other types of insurance policies are considered primary.

Your home liability insurance generally won’t pay out if:

  • You are involved in an at-fault car accident, but your car insurance policy limits are not enough to cover all of the other driver’s damages.
  • Your teen breaks into a vacant house with friends, causing property damage.
  • Your pet dog bites you, requiring stitches.
  • Your child hits a baseball into the windshield of your vehicle.

Generally, liability insurance does not cover your own property damage or bodily injury. It also excludes incidents related to your business or car accidents, and will not cover intentional damage such as assault or vandalism.

How much liability insurance do you need?

In addition to home coverage, the typical home insurance policy includes liability coverage limits starting at around $100,000. However, owners have the option of increasing this coverage for an additional fee.

When it comes to choosing your personal liability coverage limits, it’s important to consider everything you have at stake.

For example, if you are sued and found liable for damages to your property or as a result of your (or your family’s) actions, all of your current assets could be lost. This includes your savings and retirement accounts, personal assets, investments, and even your family’s home.

How much could you potentially lose if someone were to sue you for catastrophic damage?

Point: One way to determine how much liability insurance coverage you need is to calculate your net worth. Then choose policy limits that meet or exceed that amount.

In some cases, it may also be a good idea to take out an umbrella policy or excess liability cover, so that you are always protected against losses, no matter where and when an incident occurs.

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Learn more: How much home insurance do I need?

Cost of liability insurance

Although liability insurance can protect you and your assets from financial ruin, it is surprisingly affordable. In fact, increasing the personal liability limits on your home insurance policy can cost you a few extra dollars each month.

The actual cost will depend on many personal factors, such as your insurance company, the size and location of your home, the number of people living in your home (and how many are under 18), whether you have certain breeds of pets, and even hazards or structures on your property (like a swimming pool or trampoline). Many of these factors can increase your risk of personal liability and can also increase the cost of your coverage.

Generally, however, you can expect personal liability insurance to cost between $10 and $20 for every $100,000 of additional coverage you select.

The chart below gives an example of how adding personal liability coverage can affect your annual premium.

Personal liability insurance Annual home insurance rate Cost of increased coverage
$100,000 $3,098
$200,000 $3,114 $16
$400,000 $3,139 $25
$600,000 $3,161 $22

Home insurance is designed to protect one of your most important assets: your home. However, this coverage includes additional protection in the form of personal liability coverage, which can further protect you (and your property) if another person or their property is damaged. This coverage is usually very affordable to increase, but can be invaluable when it comes to protecting your other assets from liability.

About the Author

Stephanie Colestock

Stephanie Colestock is a Washington, DC-based writer with over 10 years of experience writing articles on investing, business, and personal finance. She has contributed to outlets such as Yahoo! Finance, MSN, Investopedia, Credit Karma, Credible, etc. She holds a bachelor’s degree from Baylor University and is in the process of obtaining her CFP® certification.

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