Personal Liability Insurance: What It Covers and How Much You May Need
What is personal liability insurance?
Personal liability insurance is a standard component of tenant, condo, and home insurance that protects you financially if you’re found responsible for bodily injury or property damage to others.
Unlike the other portions of your home insurance policy, which focus on financial protection for events that impact your property, personal liability insurance extends beyond the physical boundaries of your home to cover you for incidents that take place anywhere.
What does personal liability insurance cover?
Personal liability insurance can pay for a wide range of costs associated with injuries or property damage that you or a member of your household are legally responsible for.
Coverage options may include:
- Medical bills, rehabilitation costs, or lost wages for the injured party
- Repairs or replacement for property you damage
- Legal fees if you’re sued
Your liability insurance will only cover these costs up to the coverage limit listed on your policy. Common liability limits in Canada start at $1 million, but you may want to raise your policy limits.
The liability portion of your homeowners insurance typically covers the liability of the named insured (you), your family members living in the home, and any dependent children. Check your policy documents to understand who is covered, as well as any exclusions.
Examples of personal liability claims
Personal liability insurance can cover a wide range of incidents. Consider the following scenarios:
Personal injury claims are typically based on negligence, so the injured party may need to demonstrate that their injury was caused in full or in part by your failure to use reasonable care. Common examples include slip-and-fall accidents caused by poor home maintenance or failure to remove snow and ice from your property.
What is not covered by personal liability insurance?
Personal liability insurance coverage won’t pay for injuries or property damage that you or a member of your household sustain. It also won’t cover intentional damage you cause to others, although you may be able to purchase additional coverage for intentional damage caused by a minor child.
Again, it’s wise to check your policy documents to get a clear understanding of what’s included and excluded from your property insurance.
How much personal liability insurance do you need?
The standard minimum amount of personal liability insurance included in most home, condo, and renters insurance policies in Canada is $1 million.
As generous as that limit sounds, however, it’s important to understand how quickly medical and legal expenses can add up after a major injury.
Let’s consider the classic example of the icy walkway slip-and-fall. A visitor to your home slips on a patch of ice on the way out of your house and falls, sustaining injuries. Because the ice was present due to your negligence in clearing the walkway, you’re legally responsible for their medical expenses.
If the injury is a simple break or sprain, a $1 million liability policy might cover it easily. But what if the injury is a major one?
Suppose the visitor breaks their neck. Your legal liability could include:
- Costs associated with initial hospitalization and treatment, such as ambulance fees and prescriptions
- Ongoing rehabilitation costs
- Loss of income and earning potential
- Pain and suffering
- Legal fees associated with personal injury lawsuits
A 2018 study showed that the lifetime costs associated with a spinal injury in Ontario exceed $300,000, with additional costs for those with complications. Combine this with years of ongoing legal expenses, and your liability limits could quickly be exhausted.
Many insurance professionals recommend raising your liability limits to protect your assets and income, especially if you regularly travel to the United States (where liability claims can become even more costly). If you’re comparing home or auto insurance quotes with PolicyMe, our licensed advisors can help you review your finances and choose the appropriate amount of liability coverage.
A few things can increase the risk of a liability claim on your home insurance, such as a swimming pool or trampoline on your property. You may also want higher liability limits if you frequently host guests.
Personal liability insurance vs. umbrella insurance
Umbrella insurance is an optional type of coverage that can supplement the personal liability section of your home insurance policy and the third-party liability portion of your car insurance by providing higher combined coverage limits.
Umbrella insurance only includes liability coverage and is only available as a supplement to your existing liability insurance—that is, you’ll still pay for the required liability coverage included in your home and car insurance policies.
How to compare personal liability coverage options
The personal liability coverage portion of any home insurance policy will follow a standard format; you’re not likely to see many significant variations between insurers.
However, you may want to compare:
- Available coverage limits: Most Canadian insurers offer standard liability coverage limits of $1 million or $2 million. If you’re interested in a higher liability limit, you may want to ask about the possibility of raising your policy limit or purchasing additional (umbrella) coverage.
- Exclusions and endorsements: Check the language that applies to each policy and consider whether there are advantages to one insurer over another.
- Price vs. coverage: Every insurer prices personal liability insurance a bit differently, so it’s worth comparing a few coverage levels and seeing how your price changes. Consider the tradeoffs carefully before going with a lower liability limit.
Keep in mind that coverage and pricing both vary based on your situation and insurer approval.
When you compare home insurance quotes with PolicyMe, we’ll pair you with a licensed insurance advisor who can review your quotes with you and conduct a personalized needs assessment. Because our advisors don’t work for insurance companies, they can give you an unbiased read on which personal liability insurance options may be best for you.
FAQ: Personal liability insurance
This article is for general information only and is not insurance or legal advice. Examples and any sample quotes or rate ranges are illustrative and do not constitute an offer or guarantee of coverage, price, or eligibility. Actual coverage, discounts, and premiums depend on your individual circumstances and the insurer provider; if there is any discrepancy, your policy and insurer documentation govern. For advice about your situation, speak with one of our licensed insurance professionals.