What You Should Know About Personal Liability Renters Insurance

Few people expect to be the subject of a lawsuit, but if it happens to you, it could cost you a lot of money. You could end up owing tens of thousands, if not hundreds of thousands, of dollars in damages and legal fees. If you can't afford to pay that much out of pocket, renters liability insurance may be a good idea.

What is the definition of renters liability insurance?

A component of a renters policy is renters liability insurance, which protects you if you cause bodily harm or property damage to others.

Assume you're playing softball in the yard behind your rental home and your 12-year-old daughter hits a home run right through your neighbor's kitchen window. If your neighbour sues you and you are found to be at fault, your liability coverage may pay for things like repairing the broken window and treating any injuries, up to the limit of your coverage. It may also cover your legal fees.

Personal liability coverage is typically sold as part of a renters insurance policy that includes additional types of coverage. In general, these are:

• Personal property insurance pays out if your possessions are stolen or damaged in a disaster.

• Additional living expenses coverage, which pays for hotel bills and other costs if you are forced to relocate while your home is being repaired.

While you must usually pay a deductible before your personal property coverage kicks in, there is usually no deductible on liability claims. If you do not want to purchase a standard renters policy, you may be able to buy liability coverage on its own. Tenants residing in Assurant's partner properties across the United States, for example, are covered by a liability-only policy. It won't protect your personal items like a renters policy would, but it will cover your liabilities if you start a fire or create another mishap, or if your dog bites a visitor.

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Is it necessary to have renters liability insurance?

Unlike auto insurance, which is required by law in most states, renters insurance is not usually required by law. However, as a condition of your lease, your landlord may require renters insurance — or at least a minimum amount of personal liability insurance. According to Insurezio.com most recent rate analysis, the average cost of renters insurance is around $14 per month.

Consider the following differences when deciding between purchasing personal liability-only insurance and a standard renters insurance policy:

Liability coverage for renters

The most important thing to remember about personal liability renters insurance is that it only covers other people's belongings, not your own. For example, if your dog bites someone who is not a member of your household, your liability insurance will most likely cover their injuries, as long as your insurer does not exclude that breed. However, if your dog bites you, you must seek treatment through your own health insurance. Here are a few more scenarios that may be covered by renters' personal liability insurance:

Injuries and falls in the home. For example, suppose a visitor trips over an extension cord in your apartment, breaks his or her wrist, and sues you for medical expenses.

Damage that begins in your home and spreads to the property of others. A grease fire in your kitchen, for example, damages the unit next door.

You are liable for damage to other people's property. Assume your child inadvertently breaks a valuable vase while visiting a friend's home.

Liability for social events you host. For example, suppose a guest at your house party consumes too much alcohol and causes an accident on the way home, injuring passengers in another car. (While your guest's auto liability coverage may apply here as well, in some states, the host who supplied the alcohol may be held liable for such an accident.)

What does personal liability renters insurance not cover?

Renters liability insurance, like any other type of insurance, has limitations. Here are a few scenarios that your renters liability insurance would not cover, and what other types of insurance could help instead:

Injuries in public places. For instance, suppose a visitor slips and falls on an icy sidewalk outside your apartment building. Because the injury occurred in an area that the landlord was responsible for maintaining, his or her medical expenses would most likely be covered by your landlord's liability insurance rather than yours.

Car mishaps. For example, you are to blame for a car accident that injures two people in another vehicle. The medical bills and repair costs of the other parties will be covered by your liability car insurance, not your renters policy.

Your belongings have been damaged. For example, suppose a thief breaks into your apartment and steals your laptop, television, and jewellery. This scenario would be covered by your renters policy's personal property coverage rather than liability.

Commercial liability. Assume a client sues you because of a problem with your home-based business. Renters insurance typically covers only personal liability claims, not business-related claims; for this type of situation, you'll need a commercial policy.

Intentional behaviour. As an example, suppose you purposefully throw a rock and break someone else's window. That is not an accident; it is a crime, and your liability insurance will almost certainly not cover you.

What amount of renters liability insurance do you require?

The liability coverage limits on most renters policies range from $100,000 to $500,000. If you're unsure how much to invest, a good starting point is to calculate your net worth, which includes the value of your car, bank accounts, and retirement savings. You can reduce the likelihood of a lawsuit wiping out all of your assets by purchasing at least enough liability insurance to cover that amount.

If you expect your net worth to rise in the near future — for example, if you recently accepted a higher-paying job — you should consider increasing your liability limit accordingly. Because renters insurance is typically so low-cost, you may be surprised at how little it costs to increase your coverage.

Frequently asked questions

Is renters insurance the same as personal liability insurance?

A renters insurance policy includes personal liability insurance as part of the package. It compensates you if you inadvertently or negligently cause harm to another person. While a liability-only policy is available, a traditional renters insurance policy is more common and includes coverage for your personal belongings in the event of a fire, theft, or other disaster.

What does the term "personal liability" in renters insurance mean?

The personal liability section of your renters insurance covers injuries and damage for which you are legally liable. For example, if your dog bites a neighbour or a fire in your kitchen damages the unit next door, your personal liability coverage will cover the resulting expenses up to the policy limit.

Isn't my landlord's insurance going to cover me?

Your landlord's liability is covered by his or her insurance policy, not yours. A landlord policy, for example, would most likely pay out if your guest slips and falls in a public area that the landlord failed to maintain properly, but not if the guest is bitten by your dog. You'll need your own policy to cover your liabilities. Compare renters insurance quotes.