Personal Liability Renters Insurance: What You Need to Know

Few people expect to be the target of a lawsuit, but if it ever happens to you, it could cost you dearly. Between damages and legal fees, you could end up owing tens or even hundreds of thousands of dollars. If you would have a hard time paying that much money out of pocket, you might want renters liability insurance.

What is renters liability insurance?

Renters liability insurance is the part of a renters policy that covers you if you cause injuries to other people or damage to their property. (You may see it called “personal liability” in your policy documents.) Here’s how it works:

You’re playing softball in the yard behind your rental house, and your 12-year-old daughter hits a home run right through your neighbor’s kitchen window. If your neighbor files a claim against you, your liability coverage could pay for things like repairing the broken window and treating any injuries, up to your coverage limit. It also might pay your legal fees if your neighbor decides to sue you.

Personal liability coverage is usually one part of a renters insurance policy that also has other types of coverage. These generally include:

• Personal property coverage, which pays if your belongings are stolen or damaged in a disaster.

• Loss of use coverage, which pays for hotel bills and other costs if you have to move out while your home undergoes covered repairs.

» MORE: What is renters insurance, and what does it cover?

While you usually have to pay a deductible before your personal property coverage comes into effect, there’s generally no deductible on liability claims.

If you’re not interested in a standard renters policy, you may be able to purchase liability coverage on its own. For example, Assurant offers a liability-only policy to tenants living in the company’s partner properties across the U.S. It won’t cover your personal belongings as a renters policy would, but it will cover your liability if you cause a fire or other accident, or your dog bites a guest.

In a 2021 NerdWallet survey, 23% of respondents who currently had renters insurance said they bought it because they wanted personal liability coverage.

Is renters liability insurance required?

Auto insurance may be required by law in most states, but renters insurance isn’t. However, your landlord might require renters insurance — or at least a minimum amount of personal liability insurance — as a condition of your lease. The average cost of renters insurance is $148 a year, or about $12 a month, according to NerdWallet’s rate analysis.

If you're trying to decide between purchasing personal liability-only insurance and a standard renters insurance policy, consider these differences:

» MORE: 6 reasons you need renters insurance

What renters liability insurance covers

The key thing to remember about personal liability insurance is that it covers other people and their belongings — not you and yours. For example, if your dog bites someone outside your household, your liability insurance will likely pay for their injuries, as long as your insurer doesn’t exclude that breed. If your dog bites you, though, you’ll have to turn to your own health insurance for coverage.

Here are a few other scenarios that renters liability insurance may cover:

Falls and injuries in your home. Example: A visiting friend trips over an extension cord in your apartment, breaks their wrist and sues you for medical expenses.

Damage that originates in your home and affects others’ property. Example: A grease fire in your kitchen causes damage to the unit next door.

Damage to other people’s property for which you’re responsible. Example: Your child accidentally breaks a priceless vase while at a friend’s house.

Liability related to social events you host. Example: A guest at your house party has too much to drink and gets into an accident on the way home, injuring passengers in another car. (While your guest’s auto liability coverage might also kick in here, in some states the host who supplied the alcohol can be found liable for such an accident.)

» MORE: The best cheap renters insurance

What does personal liability insurance not cover?

Like any other type of insurance, renters liability coverage has limitations. Here are a few scenarios that personal liability insurance won’t cover, and which alternative types of insurance could help instead:

Injuries in common areas. Example: A guest slips and falls on an icy sidewalk outside your apartment building. Your landlord’s liability insurance, not yours, would likely cover their medical expenses because the injury happened in an area that the landlord was responsible for maintaining.

Car accidents. Example: You’re at fault for a wreck that injures two people in another vehicle. Your liability car insurance, not your renters policy, would cover the other parties’ medical bills and repair costs.

Damage to your belongings. Example: A thief breaks into your apartment and steals your laptop, TV and jewelry. This scenario would fall under the personal property coverage in your renters policy, not liability.

Business liability. Example: A client sues you over a problem arising from your home-based business. Renters insurance typically covers only personal liability claims, not those related to a business; you’ll need a commercial policy to handle this type of issue.

Intentional acts. Example: You deliberately throw a rock and break someone else’s window. That’s a crime, not an accident, and your liability insurance almost certainly won’t cover you.

» MORE: How does renters insurance work?

How much renters liability insurance do you need?

Most renters policies offer liability coverage limits ranging from $100,000 to $500,000. If you’re not sure how much to choose, a good guideline is to add up the value of your assets, including your car, bank accounts and retirement savings. By selecting at least enough liability insurance to cover that amount, you’ll reduce the chances of a lawsuit wiping out everything you own.

If you’re expecting your net worth to go up in the near future — for example, if you just landed a better-paying job — you might want to increase your liability limit accordingly. Raising your liability limit from $100,000 to $300,000 costs an extra $12 a year, on average, according to NerdWallet’s rate analysis.