How to know if you need personal liability insurance

Personal liability coverage is included in your homeowners insurance policy, but also available to purchase separately. Having additional liability coverage can help protect you financially from any claims made against you for injury or damages. However, it can be difficult to determine whether you actually need additional liability coverage.

Here are some things to consider if you’re thinking about personal liability insurance:

What does personal liability insurance cover?

Personal liability coverage provides financial support if you’re sued or found liable in court. Here are some examples of situations included in most personal liability insurance:

• Somebody gets injured in your home or at another property you own.
• Somebody gets injured in a traffic accident where you’re at fault.
• Accidental property damage caused by you.
• Lawsuits for libel, slander or false arrest.
• Paying court fees for lawsuits brought against you.

What is excluded from coverage?

While details vary from one policy to the next, the following are typically excluded from personal liability insurance coverage:

• Your personal injuries.
• Damage to your own property.
• Business-related accidents.
• Workers compensation.
• Any situation where you’re held liable under a contract.

Determine possible risk factors

If you wonder whether you should have personal liability coverage, the best way to start is to identify any possible risk factors related to your property or lifestyle. Some questions to consider might include:

• Do you own one or more rental properties?
• Do you frequently entertain large groups of people at home?
• Do you have a pool or trampoline in your yard?

It’s a good idea to consult a financial advisor for help identifying risk factors and strategies for protecting your assets. Whether you get personal liability coverage is up to you, but the more you understand about the options, the better choice you can make for your situation.