So, you’ve finally decided on an apartment to rent and are beginning the process of getting all of your ducks in a row. One commonly overlooked thing to consider is personal liability insurance. While your landlord will have to have insurance to cover the physical property, their policy won’t cover anything inside your unit, or any unfortunate situations that may arise while you’re living there.
Every time you look for standard renter’s insurance, it’s crucial to check for these things in particular:
- personal property coverage: this is also known as contents insurance, and covers the items inside your apartment
- additional living expenses: this will cover things such as motel or hotel rooms, temporary rentals, restaurant meals, or any other expenses you may have to pay for while your home is uninhabitable.
- personal liability coverage: this protects your assets should you be held liable for a personal injury or property damage.
What is Personal Liability Insurance?
Personal liability insurance will provide liability protection against any lawsuits regarding bodily injury or property damage that you or a member of your immediate family cause to others. It can also pay for any damage or injury that your pets cause. Unfortunately, it won’t pay out for injuries to yourself or other members of your family.
What Does It Cover?
Personal liability policies covers claims made against you by third parties for things that may occur through misfortune or alleged neglect. If someone were to get injured on your property, for instance — and regardless of whether it was intentional or not — they may be able to sue you for damages like medical bills. Personal liability insurance can also cover accidental damage your children may cause to a neighbor’s property: for example, if they accidentally punt a soccer ball through the window next door. In cases like that, it could be argued that you neglected to control them. A personal liability would also be good to have if your dog bit a third party (i.e. the mailman) and they sued you for their medical bills, loss of earnings, and emotional distress.
To sum up, personal liability insurance may cover a third party’s:
- claims for compensation
- legal expenses
- medical bills
- cost of repairs
What Do You Need Personal Liability Insurance For?
The Insurance Information Institute conducted research in 2009 that found that the average cost of dog bite claims was $24,840, a slight increase from the year before. 10 years later, in 2019, the average cost paid out for dog bite claims nationwide was $44,760 (itself a marked increase from $39,017 in 2018). With these costs increasing so dramatically, it can only be a good idea to make sure you’re protected. Even if your dog is usually completely docile, it may still be worth getting.
Some states also have something called social host liability. This is the legal term for the criminal and civil responsibility of a person who furnishes liquor to a guest. Basically, if you throw a party and there’s liquor involved, you may be legally responsible for anything that happens to your guests. The exact laws vary from state to state, but some go so far as to hold the host liable for things that occur after the guest has left the party. Personal liability insurance will also help protect you in these instances.
If the property that you’re renting has a pool, trampoline, hot tub, or anything else that may raise the risk of injury on your property, you should really think hard about increasing your policy limits.
Should You Take Out Umbrella Coverage?
According to the Insurance Information Institute, minimum personal liability limits usually start at around $100,000. However, the institute recommends that you take out a minimum level of at least $300,000. They also recommend that if you have investments and savings that are worth more than the liability limits in your policy, you should consider purchasing a separate excess liability or umbrella policy.
An umbrella policy is the term for supplemental liability coverage with a higher limit than your standard policy. These policies kick into action when your standard liability policy’s limit is reached. They usually cost somewhere between $150 to $300 per year, and they can potentially protect your current and future assets — something well worth considering.
Why Get Personal Liability Insurance?
You’re just renting an apartment, you don’t have much in the way of assets, and it’s unlikely you’d ever need this insurance anyway, So why get it? Simply put, your future assets. You may not have a house for anyone to sue you for, but your individual retirement account could still be susceptible to a lawsuit, according to CNBC. The same can be true for annuities and the cash value in your life insurance policy, as well as any future earnings, in the event that a judge rules that your wages be garnished if you don’t have enough insurance to cover the bill.
Personal liability insurance might seem like a boring thing to have to deal with, but it’s immeasurably better than the alternative. It may be worth getting extra coverage to protect yourself, rather than save a few bucks now but end up in trouble down the line.