Insurance serves as a contingency plan whenever things tend to go south. It’s always encouraged to purchase some sort of insurance plan that will protect you if anything unfortunate was to happen. There are many types of insurance plans, ranging from life insurance to burial insurance, car insurance or home insurance. You just need to figure out which one(s) is/are for you.
One of these insurance policies include personal liability insurance. But what exactly is that and what does personal liability insurance cover?
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What is Personal Liability Insurance?
Personal Liability Insurance is also known as Comprehensive Personal Liability (CPL) Insurance. It’s part of homeowners insurance, also known as home insurance. As per the personal liability insurance definition, it protects the insured and the insured’s household from claims resulting from injuries/damage to other people/property.
Basically, in simple words, if anything was to happen to a third party, this policy will prevent the insured from having to pay large sums out of their pocket if they are held liable.
Personal liability insurance is a type of liability insurance. Now, what does liability insurance mean? A liability insurance protects you from claims resulting from injuries or damages to people or property. It not only protects you in your home but also if you travel worldwide.
Now that we know what is a liability insurance policy, it is important to know that personal liability insurance is not the only type of liability insurance that exists. However, it is the only type that protects the insured from any third party claims when usually, with other liability insurance policies, it is often the third party that is protected.
How can you get Personal Liability Insurance?
There are three ways you can get personal liability insurance coverage:
- It is usually a package deal with your homeowners or renters insurance policy. Most insurance companies include this policy in their home insurance coverage.
- It can also be purchased as a stand alone policy if you’re an individual who doesn’t own a property and thus, don’t need homeowners insurance.
- It is also usually added to an already existing policy. One example of the policies it can be added to is a personal auto insurance.
Homeowners insurance policies usually provide a maximum of $100,000 to $300,000 in personal liability coverage. Then umbrella policies pick up where the homeowners insurance policies limits leave off and offer coverage of $1 million or more. Umbrella policies also cover other claims that homeowners insurance does not such as, libel, slander and invasion of privacy. They’re mainly useful if the injured party’s claims are more than your homeowners insurance limits. Or if the legal expenses exceed the homeowners limit.
What does Personal Liability Insurance cover?
Although a liability related claim doesn’t usually reach the court, some of them can be quite commonplace. For example, you can be held liable for a claim if the following things happen:
- Your dog can bite someone.
- The milkman could slip and fall in your driveway.
- You caused a multi-car collision.
- Your teenager didn’t properly stub out the cigarette at their friend’s house and it caused a fire.
These are the instances where you could have a claim against you and might even be held liable.
Your personal liability insurance will then cover the medical bills from the dog bite, bodily injury or damage, legal expenses and other costs if they may arise.
Another type of personal liability insurance coverage the homeowners insurance typically provides is medical payments to others. This homeowners insurance policy provides medical payments for any injuries or damages that may have happened on your property. This doesn’t mean it would only be paid if you are held legally responsible. Regardless of any legal action, the homeowners insurance would pay all the medical expenses. It’s a part of their policy.
Medical payment coverage usually starts from $1,000 per person. Higher amounts of coverage may also be available, it just depends on the type of coverage you choose for yourself.
What would the policy not cover?
The personal liability insurance policy would not cover the following:
- Liability resulting from a car accident. These claims would only be covered by your car insurance. That is, if you have any.
- Any intentional injury caused by you or your family member. These injuries then have criminal liability.
- Any injuries or damages sustained by you.
- Any injuries or damages from any business owned by you or your professional activities.
How much coverage do you need?
The amount of coverage you need basically depends on two things:
- How much liability-related risk is associated with your property.
- What your total assets are.
If you are held legally responsible for any injury or damage, all your assets can be used in a lawsuit. It’s not necessary that only the assets involved in the lawsuit are at risk. Thus, it is important to make sure that any and all assets you have should be protected with liability coverage.
Another thing to note, you do not have to pay deductibles. However, if you’ve reached the coverage limit, your insurer would require you to pay the remaining expenses, legal or medical, out of your own pocket.
What should you do?
Now, we know none of the injuries listed above were your fault, it could have just been an accident. But that is why personal liability insurance is so important.
And while the insurance itself can be very important, it is also important to know what does personal liability insurance cover when you go to an insurance agent. Although for most insurance policies, it’s not necessary that you might need them. For example, a burial insurance policy may not be the best insurance policy to purchase for something, let’s say, in their late 30s. Unless they have a serious illness. Otherwise, it would cost them more than they would be getting out of the policy plan.
But personal liability insurance is the kind of policy that everyone should have. It is not necessary to determine whether you need it or not. Anything can happen any minute that might put you under a claim and have you draw large amounts of money from your bank account, while regretting not buying a personal liability insurance just so you could save yourself today.