Personal Liability Insurance

Life is full of surprises, some of which can devastate you financially. Many people have bought residential insurance, including home, renters’ or condo insurance, to mitigate against such risks. These policies protect you, your family, the house, and other belongings.

However, an accident can occur within your household causing injuries to visitors or property damage to neighbors. Your home insurance policy will come under scrutiny to determine if it covers such issues. The focus will be on the personal liability insurance part of the homeowner or renter’s insurance.

For instance, your home’s wall collapses during heavy rains and damaging your neighbor’s vehicle. The personal liability cover will cater to any damages awarded in such a case. Now that such accidents are common in modern households, every homeowner or tenant needs to understand this liability insurance.

What Is Personal Liability Insurance?

Personal insurance is now an integral part of the policies offered by insurance companies. This policy protects you or any other members of your household against claims due to injuries and damage to other people or their property. If such accidents happen, you don’t have to pay large sums out-of-pocket. It is an extra layer of protection for household owners.

You can buy this policy as:

  • Part of homeowners, renters, condo, or dwelling insurance policy. It is also known as a comprehensive personal liability.
  • As a stand-alone policy: Best for those who don’t own or rent and they also don’t have a home insurance policy.

When you buy this coverage, you get protection against two things:

  1. Bodily injury: Assume your dog bites a visitor to your home, this could lead to a lawsuit. The injured party can sue for expenses such as lost income, medical expenses, and emotional trauma. Without liability insurance, you have to pay this out of pocket.
  2. Property damage: Assume a section of your roof collapses and damages your neighbor’s car. Your neighbor can sue for damages and you’ll be held responsible. Your personal liability coverage will take care of all costs related to this case.

Without this insurance cover, your family might suffer financial devastation if the court awards damages to the complainant.  You would have to pay such amounts from your savings and this might hand you a financial shock.

Who Needs Personal Liability Insurance?

Accidents can happen within your household and when they do, you might be found responsible. In such a case, the court will award damages to the injured party or the owner of the damaged property. 

If you consider the cost of not having personal liability cover against the benefits, there’s every reason to purchase adequate liability coverage.

It is not easy to tell when accidents can happen within your household. These can also be caused by your kids or pet which makes a case for personal liability stronger.

If you live in a rented apartment, make sure you have personal liability renters insurance to protect yourself and the family against debilitating claims. Whatever the type of home you live in, there’s a risk of accidents, and if these happen, your personal liability cover will save you a lot of trouble.

The question that comes to mind at this point is; is personal liability insurance necessary? To answer this, consider that if you don’t have enough personal liability coverage, you might end up losing your assets and that includes your home. This makes liability insurance necessary.

What Does Personal Liability Insurance Cover?

While every insurance provider offers a unique liability policy, the scope of cover is similar. Most personal liability insurance policies have the following coverage pillars:

  • Medical expenses: The policy caters to medical bills for the injuries suffered by a visitor to your home.
  • Legal costs: If there’s a lawsuit, you need to organize a defense and this requires money. You don’t have to pay this off-pocket as your liability insurance covers for any legal fees.
  • Lost income: If the injured party is unable to work due to the injuries sustained at your home, the court might award lost wages. Your liability insurance will cater for this.
  • Death benefits: If someone dies on your property and the court finds you responsible, the personal liability cover will pay for any death benefits awarded.
  • Property damage payment: If the court orders you to pay for property damages, your liability insurance cover will cater for this.
  • Away-from-home coverage: if an accident occurs away from home, the liability insurance might still apply. Any costs will still fall under the cover of your policy.

It’s important to note that personal liability insurance doesn’t cover your injuries or those of other occupants of your house. The standard home insurance policy covers these.

What Is The Average Cost Of Personal Liability Insurance?

You don’t have to pay for personal liability cover individually unless you buy it as a stand-alone policy. It is advisable to buy as much liability coverage limit as you can afford fully protect yourself against financial loss if someone sues you.

Your premiums will vary based on the coverage limit for your personal liability insurance. However, the average cost ranges from $8 to $10 a year for every $100,000 in coverage. If you set a higher coverage limit, you will pay higher premiums from one month to the next.

However, the increase is not drastic compared to the protection you get. If you triple your personal liability coverage, for instance, it will only cost $15 more per year.

Many people ask how much personal liability insurance they would need to protect themselves. The simple answer is as much as you can afford to protect your financial assets. The more assets you have, the more coverage you should purchase.

For assets worth $100,000 or more, it is more advisable to take an umbrella policy or purchase personal excess liability insurance. These components kick in if you exhaust your homeowners’ coverage limits in case of a claim.

What Is Personal Trainer Liability Insurance and Who Needs It?

Personal trainers such as massage therapists, yoga teachers, Zumba instructors, dieticians, among others require personal trainer liability insurance. This insurance cover protects them in case of claims arising from injuries sustained during training. It is a good way to protect your professional practice.

Is Personal Liability Insurance Tax Deductible?

In most cases, the cost of personal liability insurance is not deductible. According to the IRS, insurance on your home isn’t a write-off. IRS indicates only premiums for mortgage insurance are tax-deductible. Personal liability insurance falls under personal expenses which are not tax-deductible.

Final Thoughts

Personal liability coverage offers crucial protection for a household  or business owner and their family. It is an extra cushion of financial security that provides the much-needed protection in case of accidents within your business. With this information, you can now get started on the journey to protect yourself and your business by purchasing adequate personal injury cover.

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