To understand what a personal liability insurance is, we’ll first have to understand what personal liability is. A personal liability is if an accident occurs, in or out of your home, that results in bodily injury or damages property for which you are held legally responsible. Personal liability claims can include medical bills, legal fees and more if a guest is injured on your property.

If you were to take a personal liability insurance, then you would get cover if any guest or third party gets harmed or even if their property gets injured while inside your home.

So, if you have personal liability insurance, then you may be able to avoid paying out of pocket for incidents like these, up to your coverage limits. That’s why personal liability coverage is an important component of your home-owners insurance or renters insurance policy.

Let’s take an example to understand this better: Say a guest visits your home and while walking through your garage he/she gets hit by a falling ladder. The guest then suffers a broken arm and sues you for damages – which can be a very costly affair. This is where personal liability insurance can kick in.

Your personal liability insurance will cover all the costs of medical bills, as well as your legal defence fees, up to the limit of your liability coverage. However, personal liability coverage may also be able to cover an incident that occurs outside your home or property.