What Does Personal Liability Insurance Cover?
Personal liability coverage — found in homeowners and renters policies — pays if someone sues you for bodily injury or property damage occurring on or off your property. Examples include a guest injured at your home, your dog biting a neighbor, or you accidentally damaging someone's property. It also covers your legal defense costs, which can be substantial even when you're found not at fault.
How Much Liability Insurance Do You Need?
Standard homeowners policies typically include $100,000 to $300,000 in personal liability. Financial advisors often recommend at least $300,000 and pairing it with a personal umbrella policy for an additional $1 to $5 million of coverage. Auto liability limits vary by state minimum, but $100,000 per person and $300,000 per accident is a commonly recommended starting point.
What Is the Difference Between Personal and Business Liability Insurance?
Personal liability covers individual and household activities. Business liability insurance — also called commercial general liability or CGL — covers your business's operations, products, and services. If you run any business activity, even a small side hustle, personal liability coverage typically excludes those risks. A business owner's policy (BOP) or standalone commercial policy is required for business-related liability exposure.
Frequently asked questions
Does liability insurance cover intentional acts?
No. Liability insurance covers accidental or negligent acts, not intentional harm. If you deliberately injure someone or destroy their property, your insurer will deny the claim. Criminal acts are similarly excluded from liability coverage.
Is liability insurance required by law?
Auto liability insurance is legally required in almost every state. Homeowners liability insurance is not legally required, but mortgage lenders typically require a homeowners policy that includes liability coverage. Business liability insurance requirements vary by industry and jurisdiction.