What Is Personal Liability Insurance and What Does It Cover?

Posted at June 30, 2020 » By : » Categories : Business Insurance,Business Services »
personal liability insurance

Are you worried about getting caught in an expensive lawsuit? Maybe you just want to make sure you have the right insurance to cover all situations in your life. Personal liability insurance can protect you from situations that could cost you everything.

This will also protect you and others when bad situations arise. Keep reading to learn more about personal liability insurance and coverage options to ensure you’re protected!

How Does Personal Liability Insurance Protect You?

There are three main ways personal liability insurance protects you. It can protect your assets, protect you from lawsuits, and protect your family.

When it comes to your assets, personal liability insurance is typically available through your home insurance or renters’ insurance. It can provide you defense if you’re responsible for damaging property or personal injury.

This can also provide coverage for lawsuits, so you don’t have to pay legal defense fees out of your pocket. You might face lawsuits as a result of accidents happening caused by you, and this can save you on an expensive lawyer and lawsuit.

Finally, personal liability insurance will give you coverage, and can also provide coverage for your family. This will depend on your insurance contract. This will cover their actions in and out of your home and can cover you anywhere you go. Coverage might also include things that happen due to negligence.

Who Should Have This Type of Insurance?

No one can predict whether you’ll end up needing to use this insurance in the future. Also, no one can predict the unintended accidents that you or your family might be held accountable for. But it is certain that if you’re responsible for an accident that causes someone else damages either to their property or person, and you aren’t protected, you could end up with a huge financial burden.

This type of insurance is important for any adult who is living on their own and responsible for their actions. Depending on your current type of insurance coverage, adding personal liability might end up only costing you a bit more each month and could save you a lot of money down the line.

An important reason to get personal liability insurance is for your future assets, even if you don’t feel you have anything to protect right now. If you do have assets right now, not having this coverage could mean losing investments, property, and future assets or earnings like wages.

Do You Need Personal Liability Insurance?

Again, no one can predict if you’ll need coverage for an accident in the future, but it’s important to think about all possibilities. Consider this coverage in the event of a false accusation.

If someone believes you harmed their property and takes you to court, having personal liability insurance will mean that you don’t have to pay for the cost of a defense attorney.

Also, if you think accidents could happen at your home, it’s in your best interest to have coverage. If you have a slippery driveway or a dog that could bite someone, having personal liability insurance will come in handy. Statistically, it’s also a good idea to have liability coverage.

Did you know that one in 15 insured homes have a claim each year? What’s also important to note is that only one in 1,000 homeowners’ policies have a liability claim. If something happens and you aren’t covered, you could end up paying for it fully on your own.

What Does Liability Insurance Cover?

Every insurance policy and insurance contract is different for each homeowner. So it can be a bit difficult to predict what will be covered in your policy. In general, most personal liability insurance consists of a few things.

One aspect of the coverage could be medical bills that you end up with due to injuries sustained by someone who comes to your home. Another coverage aspect is legal fees if you’re sued over an accident at your home.

Also, if an injured party is unable to work or earn money after the accident, this insurance might cover lost wages. Personal liability insurance could also cover death benefits awarded to the family of a person who died on your property.

Lastly, away-from-home coverage is an important part of personal liability insurance. This means you’re protected if you’re found responsible for damages that happen somewhere other than your home, like a hotel or resort.

It’s also important to understand what will not be covered by this type of insurance policy. Purposeful intent might not be covered. For example, someone who tries to damage their belongings on your property to collect money.

Also, if a person in your family is the one who is injured or their property is injured by you or another family member, it’s unlikely that personal liability insurance would cover damages.

How Do You Get This Insurance?

Most homeowners insurance policies that are on the market offer personal liability insurance as a standard. Getting this type of coverage can be as simple as expanding your current insurance policy.

But if the coverage limits for liability insurance don’t suffice, you can extend coverage with a personal umbrella policy. This can fill the gap between what your liability coverage will pay for and any other fees from an accident that might arise.

What are Other Forms of Personal Liability Insurance?

Along with the personal umbrella policy, another form of liability coverage that your provider might offer is home business insurance. This insurance will protect people like freelancers who use their home as a business space.

So if you’re a freelancer or use your home for any type of business and an accident happens that is related to that business, this insurance will protect you. Business liability insurance protects the policyholder from lawsuits or third-party claims. This can also save you from needing to spend a lot of money on legal fees in the future.

Again, the type of liability coverage included in a homeowner’s policy will vary depending on the provider. Contacting your provider and understanding what your asking for will help you get the best type of coverage.

How Much Does It Cost and How Can You Save Money?

Since personal liability insurance will probably be included in your homeowner’s insurance, you will probably not need to pay for this policy on its own. But the premium on your current insurance plan will vary.

This will depend on the coverage limit that you set for your liability insurance. Essentially, the higher the coverage limit, the more you’ll probably pay in premiums.

To save money on your insurance policy, think about the factors that contribute to the price you’re paying. So one factor is the amount of monetary coverage you’ll receive if an accident happens. A policy could start around $100,000 of coverage and then increase.

Some personal umbrella policies offer millions of dollars in coverage, which will give the policyholder peace of mind. So the more you’re paying in premiums each month will increase depending on the coverage limit you have.

If you’re looking to save money on your liability insurance policy, you could consider how much financial coverage you need. You could save money by reducing your existing coverage limit.

Also, consider if you need any additional coverage. If no additional insurance is necessary for your life, you could save money each month by keeping your policy simple. Being mindful and strategic about your coverage and how much you need your limit to be will save you money.

How Do Claims Work?

The claims process for this type of insurance will depend on the accident that happened. So a person who was hurt on someone else’s property could ask that the homeowner cover their medical expenses using their liability insurance. At that point, the homeowner would file the claim on behalf of the insured party.

But if the homeowner doesn’t believe they’re responsible for the accident, they could refuse to file the claim. This situation could then escalate to a lawsuit, and the injured party and the homeowner would file claims for legal defense.

Another factor in the claims process is the state where the accident occurred. There are some states where a victim can file a claim against the homeowner’s insurance company, rather than going through the homeowner. But there are other states where the only person able to file a claim is the responsible party or homeowner.

Understanding Personal Liability Insurance Can Save Your Future Assets

Personal liability insurance is important for homeowners who want to protect themselves and their families from legal fees after an accident happens.

It’s important to understand what personal liability insurance could cover for you and how to go about getting this insurance policy. Being informed about cost and how to save will help you get the right coverage that will work best for your financial future.

Click here to learn how we can help you get all the coverage you need today to protect yourself and your financial future!