Of course you require personal liability to pay for the damages if your negligence results in an accident that harms people or causes property damage. You would be responsible for any expenses in the absence of personal liability insurance. Depending on how serious the incident is, these charges may reach the tens of thousands of dollars or even higher.
The price of paying for the damages to a person or piece of property may be reduced with personal liability coverage. While it won’t completely cover the price of the losses, it can reduce them overall, usually capping your out-of-pocket expenses at your deductible.
So for this premium guide, we’ll help you understand how personal liability insurance works and when you should include it in your insurance portfolio.
What exactly is personal liability insurance?
You can include personal liability insurance as an endorsement to your homeowner’s, renter’s, or private automobile policy. If you don’t have any assets to protect, such as a home or car, you can also purchase a standalone policy.
Damage to other people’s properties or other individuals caused by you is covered by personal liability insurance. For instance, one of your guests trips and falls as they leave your house after supper with friends. Your personal liability insurance would assist in paying for the medical expenses and any additional harm that might have been caused.
Of course most policies include $100,000 in personal liability coverage. Still, you can buy additional coverage or buy an umbrella policy that covers additional personal liability in cases where you may experience a high loss.
The ways personal liability insurance work?
Personal liability coverage is a part of many insurance policies, or you can add it to many policies. Just because you have personal liability insurance on your home doesn’t mean it only covers liability at home though.
It can cover incidents outside of the home that other insurance doesn’t cover. For example, it wouldn’t cover a car accident since your car insurance should cover it. But it may cover damage you caused to property while riding your bike.
If the incident or the damage you caused is terrible enough that it goes to court, your personal liability policy may cover the court costs, lawyer fees, and settlements you and the victim agree on outside of court.
What does a personal liability policy cover?
Like most insurance policies, personal liability policies don’t cover everything. The common exclusions include
- Damage caused by a car accident or with your car (However, unlike credit life insurance or gap insurance, it won’t pay off the car loan)
- Damage caused intentionally or as a part of a crime
- Any damage or injuries to you or the people who live in your home
- Any business-related expenses or damage
Now that you know what a personal liability policy doesn’t cover, let’s look broadly at what it covers:
- Bodily injury caused by you or your pets
- Bodily injury occurring at your residence
- Property damage caused by you or a covered family member
How personal liability insurance works together with other policies
Umbrella plans can be used in conjunction with other policies that provide personal liability protection but have limits. Here’s an illustration: The mailman trips and hurts his back on your stairs. He had to miss six months of work due to surgery.
The total damage is $750,000. The coverage for personal liability on your homeowner’s insurance is $100,000, and your deductible is $2,500. After you pay $2,500 out of your pocket, your home insurance company will pay $97,500, leaving you with $650,000 in debt to cover.
However, if you have an umbrella policy, it will pick up the difference between what your home insurance will pay and the total cost of the damages.
Where to sign up for coverage
You can sign up for personal liability coverage with many different insurance policies you may need. For example, if you own a home, you need homeowner’s insurance because most lenders require it. Your home insurance policy may include personal liability coverage. Pay close attention to the limits, though.
Generally, home policies have $100,000 limits. However, you may be able to pay for extra coverage if you feel that’s not enough. You can also add personal coverage policies to your renter’s insurance or dwelling policy. It’s usually a part of the policy but always read the fine print since no two insurance companies have the same coverage options.
If you don’t own a home or rent one, you can buy a policy to cover personal liability as a standalone policy. The insurance companies you’d contact for other insurance policies, such as home or car insurance, also sell policies for personal liability. Like any policy, shop around to ensure you’re getting the right amount of coverage at premiums you can afford.
Some insurance companies also allow you to add personal liability coverage to a personal auto or watercraft policy. Suppose you want an umbrella policy for higher coverage amounts or ensure you and your loved ones are protected. In that case, you can also buy an umbrella policy from any insurance agent.
Again, read the fine print and ensure the policy covers what you need to avoid unpleasant surprises.
Get protected with the right policy
Personal liability insurance is no different from other liability insurance policies in having exclusions. To ensure that all eventualities are covered, be sure to understand what a policy covers and excludes, and compare it to your way of life. Find out what choices you might have by speaking to your neighborhood insurance representative.
If your house insurance policy includes personal liability coverage, make sure it provides enough protection for your estimated needs. Even if you believe you have no personal liabilities, think about purchasing even a small coverage.
Well, unfortunately, everybody who leaves their house runs the risk of being held responsible for harm to someone or something. Getting a personal liability policy is crucial whether you have children, ride a bike, drive a car, or own a home. To avoid finding yourself in a precarious financial situation, it is essential to have coverage to safeguard your finances.
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