Liability insurance is an important part of a standard home insurance policy. But what does homeowners liability insurance cover exactly? We’ll do our best to explain.
What is homeowners liability insurance
Homeowners liability insurance is one of the essential coverages provided by a typical home insurance policy. Also known as Coverage E, personal liability insurance provides you with valuable financial protection.
Specifically, it may cover you against lawsuits for bodily injury or property damage that you or family members accidentally cause to other people. It may also pay for injury or damage caused by your pets.
When It Applies
For homeowners liability insurance to apply, you must be found responsible, negligent or at fault for the bodily injury or property damage that occurred.
For example, if a tree on your property falls and damages your neighbor’s roof, your liability insurance will only pay for the damage if you are found responsible. It would have to be proven that you knew the tree was dead or dying and could cause damage to your neighbor’s property. Otherwise, the cost of repairs would be covered under your neighbor’s home insurance policy.
Choosing the Right Coverage Limits
Generally speaking, personal liability coverage limits start at about $100,000. If you have significant assets, you may want to add more coverage than that. You can increase your personal liability limit and also get broader coverage by purchasing an umbrella policy from your insurance company.
Your umbrella policy will kick in once the standard liability limit on your home insurance policy is used up during a claim. Your insurance carrier or agent can help you decide if an umbrella policy is right for you.
Other standard coverages
In addition to personal liability, a standard home insurance policy also includes dwelling coverage, other structures coverage, personal property coverage, loss of use coverage and medical payments coverage.
Medical payments coverage helps protect you if a guest is injured on your property. Also known as Coverage F, it will take care of their medical bills whether or not you are legally liable for your guest’s injuries.
Personal liability and medical payments are both considered third-party coverages, because they cover you when someone makes a claim against you.
What is covered by liability insurance
Incidents covered by homeowners liability insurance may include, but are not limited to, the following:
- Injuries on Your Property
- Injuries Away From Your Property
- Property Damage Caused by Someone in Your Household
- Injuries Caused by Your Pet
Injuries on Your Property
Personal liability covers you if a guest accidentally injures themselves on your property and you’re found responsible. You could be covered for the guest’s medical expenses, lost wages, and pain and suffering.
Injuries Away From Your Property
Liability coverage may also apply away from your home, assuming you’re found legally liable. For example, let’s say you or a family member accidentally injures someone in the park. Your homeowners liability insurance can help cover the person’s medical bills, as well as pay for legal costs if you’re sued.
Property Damage Caused by Someone in Your Household
If you or a family member accidentally damages someone else’s property, liability insurance can help protect you. For example, if your child breaks a neighbor’s window while playing baseball, personal liability can help pay to repair or replace the damage up to your policy limit.
Injuries Caused by Your Pet
When it comes to incidents involving pets, most states apply the concept of strict liability. This means that the pet owner is responsible under most circumstances. Fortunately, homeowners liability insurance helps pay for medical bills if your pet causes an injury to another person.
Please note that certain dog breeds or dogs with a history of aggressive behavior may be excluded from liability coverage.
Common scenarios
Let’s look at some more examples of when homeowners liability insurance may offer you financial protection. All of these examples assume that you, as the homeowner, were found responsible for the incident.
| Incident | What Liability Insurance May Help Cover |
| You accidentally ruin a neighbor’s expensive rug. | Replacing the rug |
| You failed to shovel after a snowstorm, causing a guest to slip and fall. Their injury prevents them from working. | Medical bills, lost wages, pain and suffering |
| Your mail carrier trips over a loose stair tread, falls down and sues you. | Lawsuit settlements, legal bills, pain and suffering |
| Your dog knocks someone to the ground at a park. | Medical bills, pain and suffering |
| Your child accidentally injures another child on the playground. | Medical bills, pain and suffering |
What is not covered by liability insurance
Incidents that are not covered by personal liability insurance may include, but are not limited to, the following:
Injuries to People Within Your Household
Business-Related Incidents
Car
Accidents
Intentional or Criminal Acts
Injuries to People Within Your Household
Personal liability doesn’t cover costs related to your own injuries, or the injuries of others in your household. Let’s say you cut your hand preparing dinner. In that case, your health insurance would cover the medical bills, not your homeowners liability insurance.
Business-Related Incidents
Homeowners liability insurance does not cover problems that arise out of business activities, such as a person accidentally injuring themselves while visiting your business. To be covered, you would need general liability insurance, which is a form of small business insurance.
Car Accidents
As you might expect, homeowners liability insurance does not cover vehicle-related injuries that you cause to other people. That falls under the liability portion of your auto insurance policy.
Intentional or Criminal Acts
If you or someone in your household intentionally injures someone or damages their property, your homeowners insurance liability will not help cover the associated costs. The same rule applies for criminal acts.
