What Does Homeowners Liability Insurance Cover?

What Does Homeowners Liability Insurance Cover? article image.

The Girl Scout at your door hands you the Thin Mints—and then trips and falls down your front steps, breaking her arm. Are you on the hook for her medical bills? In a scenario like this, homeowners insurance liability coverage can pay medical costs and other expenses when a visitor is injured on your property—but there are some exceptions. Here's what you need to know.

What Is Homeowners Insurance Liability Coverage?

All standard homeowners insurance policies include liability coverage. This insurance protects you if a visitor is injured on your property, or if you or a family member living in your home accidentally hurts another person or damages their belongings off your property. If your children are playing football and break a neighbor's window, for example, home liability insurance can pay for it.

The two key components of home insurance liability coverage are personal liability coverage and medical expense coverage.

Personal liability: If you're sued due to a covered incident, homeowners insurance liability coverage pays for (and usually appoints) an attorney for you. It also pays damages for which you're found responsible, up to the limits of your coverage.

Medical expenses: When a visitor is injured on your property, the policy may help pay their medical bills, even if they have health insurance. It's no-fault coverage, which means the injured party can generally submit medical bills to your insurer without filing a claim against you.

Typically, home liability insurance also covers:

  • Lost wages: If the injured person can't work due to their injuries and you're found to be at fault, your policy can reimburse them.
  • Pain and suffering: These can result if a court awards damages to compensate the injured person for mental, emotional and physical pain from the injury.
  • Death benefits: These include funeral costs and death benefits for survivors if someone dies due to an injury in your home.
  • Libel and slander: Most homeowners liability insurance covers you in lawsuits that accuse you of defaming someone's character.

What Is Not Covered by Home Insurance Liability?

Injuries or damages not covered by home insurance liability commonly include:

  • Injuries to your family members: This is covered by your health insurance.
  • Intentional injury or property damage: If a salesperson falls down your steps, it's covered by liability insurance. If you push them down the steps, it's not covered.
  • Dog bites: The way insurance providers handle dog bites varies. Some won't insure you if you own a breed the insurer considers "dangerous" or if your dog has been declared vicious according to your local ordinances. Restraining the dog with a cage or a chain or showing proof of obedience training may qualify you for coverage.
  • Car accidents: These should be covered by auto insurance. Some policies have other out-of-home exclusions, such as boating accidents.
  • Business-related injuries: If you run a business out of your home and someone visiting you for business purposes is injured on your property, that would be covered by business insurance.

There may be other exclusions, so review your policy carefully to clarify what is and isn't covered.

What to Do if Someone Is Injured in Your Home

If you think you or the injured person may want to file a claim, tell the insurance company about the incident right away. (Many policies require notifying the insurer as soon as possible, or the claim may not be covered.) If the person later sues you, inform your insurance company immediately.

The process that follows a personal injury is similar to what happens after a car accident. Take photos of any damages or injuries as well as the setting where they occurred. Get names and contact information of any witnesses, as well as the injured person, so your insurance company can contact them to handle the claim.

For the injury to be covered, the injured person generally must prove you were somehow negligent, which could mean you're ignoring unsafe conditions on your property or not cautioning visitors. For example, if you warn a visitor to be careful about a loose step on your porch, you're not being negligent. If you know about the loose board and say nothing, you could be considered negligent.

Do You Have Enough Homeowners Liability Insurance?

Liability claims accounted for just 2.8% of all homeowners insurance claims in 2019. As rare as they are, however, they can be costly. In 2019, the average loss from a liability claim was $22,363. Fortunately, protecting yourself is fairly inexpensive. Home liability insurance usually costs about $10 annually for each $100,000 worth of coverage, according to an Insure.com analysis.

But how much liability coverage is enough? In a lawsuit, all your assets could be at risk, including your home, retirement accounts, investments and savings, so liability coverage should provide coverage that's at least equivalent to your total net worth.

Most homeowners insurance starts with $100,000 worth of liability insurance, but you can buy more. You may also want umbrella insurance, which provides additional coverage in increments of $1 million for liability coverage that exceeds the limits of your home or auto insurance policy. You'll generally need a home and auto policy with the same insurer and at least $300,000 in homeowners liability insurance to buy umbrella coverage. An insurance agent can help you determine the amount and type of coverage you need.

Protect Your Finances, Protect Your Credit

When accidents happen, home insurance liability coverage can provide peace of mind. So can a good credit score. In most states, insurers review your credit-based insurance score when setting insurance rates. While this isn't the same as your credit score, the two are generally similar, and a poor score can mean you'll pay more for insurance. Checking your credit report regularly and paying bills on time can protect your credit—just like insurance protects your home.