What is Personal Liability Insurance and What Does it Cover?
The personal liability portion of your homeowner’s insurance may cover more than you realize. Yes, it covers incidents that occur at your home, but it also covers you in many other situations that you may not even realize.
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Keep reading to learn how personal liability insurance can help you and why you need it.
Personal Liability Basics
Personal liability insurance helps cover you in the face of a liability. This could mean an accident that occurs at your home or something that occurs away from your home, but that you are personally liable for, including personal injury and property damage.
Personal liability insurance covers you in the event that someone sues you for damages. For example, let’s say a friend was visiting your home and they got injured. They had to go to the hospital to care for their broken bones and concussion. Even though it was your friend, they want you to pay for the damages. Whether they sue you or just request that you cover the cost of the damages, your liability insurance can help cover the cost, up to your coverage limit.
The Basic Liability Insurance
Many home insurance policies come with $100,000 in liability insurance. This means that you have coverage of $100,000 per occurrence, should you need to make a claim. Don’t just assume that $100,000 is enough, though. What if something catastrophic happens? Do you have the money beyond the $100,000 to cover the damages?
If you don’t, consider increasing your liability coverage. It typically doesn’t cost as much as many people think and it can save you from financial ruin should something bad occur. Talk with your insurance agent as you can increase your coverage and/or opt for personal liability umbrella coverage to help you stay protected.
What Does Liability Insurance Cover?
Liability insurance typically covers three things:
– Injuries caused to another person either at your home or elsewhere that are your fault
– Financial damages from lawsuits due to injuries or issues that are your fault
– Property damage that is your fault
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What Does Liability Insurance Not Cover?
While liability insurance covers a wide number of issues that can occur at and away from your home, there are several things that it doesn’t cover:
- Business-related claims even if you work out of your home
- Personal bodily injuries that occur to you or a member of your household
- Any personal bodily injuries that were intentional
- Any property damages that were intentional
- Damages to a person or property during a car accident
Personal Liability Umbrella Policy
In some cases, you may even want to consider a personal liability umbrella policy. This coverage does cost you more, but it provides more personal liability insurance coverage than your home insurance can provide.
If you have a high net worth or have a high likelihood of being sued due to damages, an umbrella policy can be a good investment. You can usually get high coverage (in the millions) for just a few hundred dollars a year.
An umbrella policy kicks in after your home insurance covers the damages. After you meet your home insurance maximum coverage limit, the umbrella policy would cover what’s left, if it’s less than the total coverage amount.
Personal liability insurance is one of the best ways to protect your current and future assets. You cannot predict what will happen in the future. Why take the chance? Personal liability insurance doesn’t cost much and it can save you from financial ruin in the future.
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