Renters Liability Insurance

Few individuals expect to be sued, but if you are, it might cost you a lot of money. Between damages and legal fees, you could end up owing tens or hundreds of thousands of dollars. If you can’t afford to pay so much out of cash, you should consider renters liability insurance.

What is renters liability insurance?

Renters liability insurance is a component of a renters policy that protects you if you cause harm to others or damage to their property. (In your policy documentation, it may be referred to as “personal liability”). This is how it works.

You’re playing softball in the yard behind your rental property when your 12-year-old daughter smashes a home run straight through your neighbor’s kitchen window. If your neighbor makes a claim against you, your liability insurance may cover costs such as replacing the broken window and treating any injuries, subject to your coverage level. It may also cover your legal bills if your neighbor chooses to sue you.

Personal liability coverage is typically part of a renters insurance policy that includes other forms of coverage. These often include:

• Personal property coverage provides compensation if your items are stolen or damaged in a disaster.
• Loss of use coverage covers hotel bills and other expenses if you have to leave your home while it is being repaired.

While most personal property coverage requires a deductible before coverage begins, liability claims typically do not require a deductible.

If you don’t want to buy a basic renters policy, you may be able to get liability coverage separately. For example, Assurant provides a liability-only policy to tenants living in its partner buildings throughout the United States. It does not protect your personal things like a renters policy, but it does cover your liabilities if you start a fire or cause another mishap, or if your dog bites a guest.

Is renters liability insurance required?

While most states require auto insurance, renters insurance is not. However, your landlord may need renters insurance—or at least a minimum level of personal liability insurance—as a condition of your lease. Renters insurance costs an average of $148 per year, or about $12 per month, according to Reliableinsurance rate research.

When deciding between personal liability-only insurance and a basic renters insurance coverage, consider the following differences:

What renters liability insurance covers

The important thing to know about personal liability insurance is that it protects other people and their property, not you and yours. For example, if your dog strikes someone outside your family, your liability insurance will most likely cover their injuries, provided your insurer does not prohibit that breed. If your dog bites you, you’ll have to rely on your own health insurance for coverage.

Here are some additional instances that renters liability insurance may cover:

Falls and injuries at home. For example, a visiting friend slips on an extension cord in your flat, fractures their wrist, and sues you for medical bills.

Damage that starts at your home and spreads to other people’s properties. For example, a grease fire in your kitchen damages the unit next door.

Damage to other people’s property for which you are accountable. For example, your youngster accidently damages a costly vase while visiting a friend’s house.

Liability for social activities you host. For example, a guest at your house party drinks too much and causes an accident on the way home, hurting passengers in another car. (While your guest’s auto liability coverage may apply here, in some areas, the host who supplied the alcohol may be held accountable for the accident.)

What does personal liability insurance not cover?

Renters liability coverage, like all types of insurance, has limitations. Here are a few circumstances that personal liability insurance will not cover, and what other types of insurance could help instead:

Common-area injuries. For example, a guest slips and falls on an icy pavement outside your apartment complex. Your landlord’s liability insurance, not your own, would most certainly cover their medical expenditures because the injury occurred in an area that the landlord was responsible for managing.

Car accidents. For example, you are at responsibility for causing a collision that injures two persons in another vehicle. Your liability car insurance, not your renters policy, would pay the other party’s medical expenses and repair costs.

Damage to your belongings. For example, a thief breaks into your flat and steals your laptop, television, and jewelry. This scenario would fall under your renters policy’s personal property coverage rather than liability.

Business liability. For example, a client sues you due to a problem with your home-based business. Renters insurance normally only covers personal liability claims, not business-related claims; to address this type of issue, you will need a commercial coverage.

Intentional acts. For example, suppose you purposefully hurl a rock and break someone else’s window. That is a crime, not an accident, and your liability insurance will almost certainly not protect you.

How much renters liability insurance do you need?

Most renters’ insurance have liability coverage limitations ranging from $100,000 to $500,000. If you’re not sure how much to choose, add the worth of your possessions, such as your car, bank accounts, and retirement funds. By purchasing at least enough liability insurance to cover that amount, you can lessen the likelihood of a lawsuit wiping out everything you have.

If you expect your net worth to rise in the near future, such as if you recently accepted a higher-paying job, you should consider increasing your liability limit correspondingly. According to Reliableinsurance pricing analysis, increasing your liability limit from $100,000 to $300,000 costs an additional $12 per year on average.