What Is Renters Liability Insurance, and Do You Need It?

The liability coverage in your renters policy pays for damage you cause to other people or their belongings.

Sarah SchlichterNovember 4, 2020
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What Is Renters Liability Insurance, and Do You Need It?

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Few people expect to be the target of a lawsuit, but if it ever happens to you, it could cost you dearly. The median award for personal injury lawsuits was $100,000 in 2018, the most recent year for which data is available, according to the Insurance Information Institute. If you’d have a hard time paying that much money out of pocket, you might be a good candidate for 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.

For example, say 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 sues you and you’re judged to be at fault, 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.

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

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

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

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.

Is renters liability insurance required?

Unlike auto insurance, where minimum liability coverage is required in most states, renters insurance typically is not mandated by law. However, your landlord might require it as a condition of signing your lease. Even if that’s not the case where you live, the various benefits of renters insurance may make it worth the money.

Renters insurance liability coverage

The key thing to remember about 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 may be covered by personal liability insurance for renters:

  • A visiting friend trips over an extension cord in your apartment, breaks his or her wrist and sues you for medical expenses.

  • A grease fire in your kitchen causes damage to the unit next door.

  • Your child accidentally breaks a priceless vase while at a friend’s house.

  • A guest at your house party has too much to drink and gets into an accident on the way home, causing injuries to 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.)

What isn’t covered by personal liability renters insurance?

Like any other type of insurance, renters liability coverage has limitations. Here are a few scenarios that would not be covered by your renters liability insurance, and which alternative types of insurance could help instead:

  • A guest slips and falls on an icy sidewalk outside your apartment building. His or her medical expenses would likely be covered by your landlord’s liability insurance, not yours, because the injury happened in a common area that the landlord was responsible for maintaining.

  • You’re at fault for a car accident that injures two people in another vehicle. The other parties’ medical bills and repair costs will be covered by your liability car insurance, not your renters policy.

  • 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.

  • 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.

  • 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.

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 your net worth, including the value of 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 all your assets.

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. Because renters insurance is generally so inexpensive, costing just $14 a month on average in NerdWallet’s latest rate analysis, you might be surprised by how little it costs to increase your coverage.

If you need more than the maximum amount of liability coverage from your insurer, consider purchasing umbrella insurance. This type of insurance offers additional liability coverage above and beyond the coverage on your renters, auto or other policies.

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