When you buy home insurance, there are generally two broad categories of coverage that are included: property and liability. Property coverage covers all your belongings inside your home (that’s contents insurance coverage), and the building itself, if the property is a house. Personal liability insurance is a bit more complicated, which is why we’re often asked, “do I need personal liability insurance?”
In short, yes you do. Here’s why.
Summary of liability insurance
What is personal liability on home owners insurance? In simple terms, liability insurance covers legal matters in relation to your property. It covers the legal fees when you are sued over issues with your property. This covers two main umbrellas:
- Bodily injury.
- Property damage.
Really, this is “accident coverage,” and comes into play when you or a family member has been found partially or wholly responsible for said accident in relation to your property. This could include a guest slipping on an icy driveway or tripping over a loose carpet. Most cottage insurance policies provide some liability coverage as well, thankfully.
Common instances of liability claims include:
- Accidents involving pools.
- Tripping on loose carpets or items left on the floor.
- Slipping on icy surfaces.
- Falling trees.
- Injury to guests after serving them alcohol.
- Dog bites.
Renters liability insurance
What does personal liability mean in renters insurance, by comparison? It works largely the same way, except that renters aren’t responsible for the entire property—just their living spaces, in most cases. For example, a tenant wouldn’t be open to litigation if a visitor tripped over a loose carpet in an apartment building’s front hallway, but would be exposed to legal liability if the same thing happened inside their own apartment unit.
Having said that, dog bites are among the most frequent claims for personal liability insurance, and those can happen anywhere. It might not even happen on or around your apartment building, making it important to cover yourself and your pet in case of an accident.
Do you need liability personal insurance by law? No, but it offers so much protection in the event that something untoward happens on your property that it just makes sense.
What’s covered?
Medical fees
Most personal liability policies will pay the cost of any medical expenses resulting from the accident, and possibly even limited amounts when no fault has been determined (but don’t rely on that!). This not only helps you act like a good citizen, but it also wards off some claims where the injured party rightly wants to be compensated for their out-of-pocket expenses.
Legal fees
If a claim does head to court, your insurance company will often pay for the lawyer defending you in court, along with fronting the cost of any fines the court assigns (up to the limits of your policy, of course). One thing that property-related personal liability does not cover is anything to do with a vehicle. Those are insured under your auto insurance policy.
How much personal liability insurance do I need?
Most personal liability insurance policies provide $100,000 of coverage by default. It seems like a lot of money until medical bills and legal fees become a part of the equation (often at the same time), making it prudent to get a little extra coverage (especially if your home insurance deductible is on the larger side). The reality may be that your budget limits the amount of coverage you can pay for. In that case it may be best to get a quote on the level of liability coverage you want today, and then increase coverage to that level when it’s a good time.
While Canada does not have the same litigious environment as our southern neighbours, we do have our share of liability exposures and claims. Be sure to review your personal liability policy to better understand what it covers.
You’re always welcome to get an aha insurance quote for your home online or call us and we’ll be glad to help you experience our vision of insurance.
