If you rent a home, room, or apartment, it's essential to carry personal liability coverage to protect yourself against potential lawsuits. Your landlord's insurance will only cover structural damages. It does not include the contents within your dwelling. Here are important facts about personal liability coverage and how it can help you.
Personal liability insurance is needed when a third party claims that you are responsible for their injury or damage to property and asks for compensation. However, if your insurance provider thinks otherwise and denies compensation, you may face a lawsuit. It's particularly important to carry liability coverage as it protects you from medical, repair or replacement, and litigation expenses.
Personal liability coverage only provides so much protection, and you need to purchase extensions to raise coverage limits or cover other risks. The policy won't cover damage caused by vehicles, which can be covered by auto insurance. It also does not cover anything related to a business venture. Mishaps involving family members resulting in injury or property damage are also not covered.
The amount of liability coverage you decide upon depends on multiple risk factors. Ask yourself what the chances are of accidents happening at your rental space. If you never invite guests over, it might not be a major concern. However, if you regularly invite guests to your place, it's a good idea to carry at least $100,000 worth of liability coverage, which is typical of a renters insurance policy.
A renters insurance policy, on average, costs about $187 per year. Raising your liability limits doesn't cost much. You may supplement your policy with umbrella coverage, which extends the coverage limits of an existing policy.