So long as a person’s homeowners insurance policy includes personal liability insurance, injury accidents that occur on the premises will be covered. This means that if a homeowner damages another person’s property or body by accident, his or her homeowners’ insurance will cover the expenses if the injured party decides to sue.
If a person is sued for injuring someone or destroying property, personal liability insurance would cover the costs that come with the lawsuit. More often than not, personal liability insurance is included with residential insurance policies, including renters, homeowners, and condo insurance. Alternatively, it can be purchased as its own standalone policy.
Two things are protected under the standard coverage of personal liability in a homeowners insurance policy: property damage caused by the home’s residents and bodily injury. Examples of when these would be used include:
- Property Damage: When a tree located on a person’s property falls on his or her neighbor’s roof during a storm, the owner of the tree may be responsible for property damage. The neighbor could pursue a lawsuit in order to receive money back for the damage. He or she might even pursue expenses for a real estate attorney as he or she looks for another home. Personal liability insurance would protect the owner of the tree if he or she were named a defendant in the case.
- Bodily Injury: If a dog ran up and bit a delivery driver on a person’s property, the injured delivery driver may decide to sue the dog owner for the expenses related to the accident, like missed work, lost wages, emotional distress, and medical bills. Personal liability insurance protects the dog owner, who would be made the defendant in the case, if he or she is deemed to be legally liable.
Those situations both involve incidents occurring on the defendant’s property. However, property damage protection goes beyond the home. It can actually be used to protect members of the policy holder’s household while they are outside the house.
For example, if a person breaks someone’s foot by mistakenly riding their bike over it at a park, the liability portion of the person’s homeowners insurance policy would cover the medical bills if he or she were found to be responsible. Car accidents, however, would not be covered. Those would need a car insurance policy.
Injury accidents, or personal injuries, are covered under homeowner insurance policies so long as the policy has personal liability coverage, which the majority of policies do. But not every kind of injury will receive coverage. Only injuries caused by negligence will be covered.
Homeowners insurance will not pay for someone’s injury case if they intended to cause the injury. Only instances where a person caused an injury because they did not take proper precautions will be covered. For example, an assault will not be covered, but an injury sustained by a guest due to mishanlded, dangerous household products will.
Personal liability insurance applies only to the injuries sustained by victims of negligence, not the defendant’s injuries. Those are handled by health insurance.
Another benefit of homeowners insurance is it may also pay for attorney expenses. Normally, the insurance company will even appoint the attorney, as well as pay for all his or her fees.
It is generally thought that the more financial assets a person has, the more liability insurance he or she needs. To limit the cost of a financial loss in the event of a lawsuit, a person’s liability coverage should be as high as he or she can afford.
People with assets valued over $100,000 should consider either personal excess liability insurance, an umbrella policy, or both. Both of these policies supplement coverage with a higher limit. After a person exhausts his or her homeowners’ coverage, an umbrella policy or personal excess liability insurance kick in.
It is not terribly expensive for homeowners to purchase a higher limit for personal liability coverage. Especially when compared to other homeowner insurance modifications, like an increase in dwelling coverage, personal liability coverage does not cost very much at all. Some people might only pay approximately $15 more every year.