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Apr 8, 20225 min

What Is Personal Liability Coverage?

There are many different insurance types available, but personal liability coverage can be particularly helpful. It covers you if you're involved in an accident–in or out of your home–that leads to injury or property damage brought on by yourself or household family members. In this guide, we've got the lowdown on personal liability coverage so you can make an informed decision about whether it's the right insurance option for you.

Personal liability coverage definition

Sometimes referred to as "comprehensive personal liability (CPL) insurance," personal liability coverage forms part of homeowners insurance or an umbrella policy (more on that in a bit). It's designed to protect you and members of your household from claims that result in injuries or damage to other people or their property.

When used, it prevents you from being solely and legally responsible and means you won’t have to pay large sums of your own money to cover the damage to a third party. Essentially, it’s all about financial protection and ensuring you aren’t left out of pocket if you’re liable for injury to another person or damage to their belongings.

To illustrate, your children might be playing soccer in the garden, and one of them kicks the ball into the neighbors' yard, smashing the greenhouse in the process. In this scenario, your personal liability coverage would come into effect so that you don't have to pay for the damages.

The majority of homeowners insurance policies offer a minimum of $100,000 in personal liability coverage. This means the insurance company can pay up to that amount in total if need be. Higher limits may be available if you think they’re necessary.

Understanding your personal liability coverage

Personal liability coverage essentially covers mishaps to other people caused by yourself. There are several ways you can obtain personal liability coverage:

  • Purchasing it as a stand-alone policy (this is popular with people who don’t own or rent property)
  • Added to an existing policy, such as a personal auto or watercraft policy
  • As part of a homeowners insurance policy or renters’ insurance – when purchased like this, it’s not just limited to the insured premise and covers incidents that happen elsewhere.

What does personal liability insurance cover?

With personal liability coverage under your basic homeowner's insurance or renters insurance, you can expect to be covered under the following:

  • Lawsuits faced as a result of an accident
  • Property damage that occurs as a result of your negligence
  • Bodily injury to another person
  • Bodily injury or property damage caused by your pets
  • Medical bills resulting from a visitor’s injury at your home

The role of medical payments

Medical payments for others are usually included in your personal liability coverage. A policy provides for the payment of medical expenses for anyone accidentally injured on your property, regardless of if you were legally responsible. Medical payments coverage typically starts at $1,000 per person, with higher amounts available depending on the type of coverage you choose.

Getting umbrella liability insurance

If you find that your policy's liability isn't sufficient, you can opt for additional coverage, such as personal umbrella liability insurance. This provides additional personal liability protection and helps cover costs associated with serious injury in an auto accident or accident on your property that exceeds liability coverage limits.

What is not covered by personal liability insurance?

Personal liability coverage protects you from many potential scenarios, but there might be some claims that aren’t included in the policy. These include:

  • Basic cover is unlikely to protect you for liability involving an automobile accident
  • Injuries or damages sustained by you or family members in your home
  • Business activities or claims related to your profession
  • Intentional bodily injury or property damage caused by you or a member of your family in your home

You’re not covered for injury (or worse) to yourself. You would need to take out life insurance to protect you and your family against serious injury or even death.

Other liability coverage exclusions

Homeowners, renters, or condo policies don't cover every situation of bodily injury or property damage where you or a covered member of the household may be legally responsible. Expect to find some exclusions and exceptions.

Before agreeing to a policy, review it thoroughly to understand the elements included and excluded. If you're unsure about anything, don't be afraid to flag it up, so you have complete clarity before crossing t's and dotting the i's on the policy.

In conclusion: personal protections

Personal liability coverage comes in handy and can be the difference between peace of mind if you're at fault for other mishaps and find yourself having to pay significant sums from your own pocket. As it typically comes with homeowner's and renters' insurance, you benefit from it as part of a broader policy. Therefore, you can rest assured knowing that you and your family are covered if accidents or damage are caused to other people and their belongings.

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