When renting an apartment, townhouse or single family home, it’s important to secure insurance to protect yourself from unexpected financial losses. But depending on your situation, you may be trying to figure out how much coverage you really need.
In the grand scheme of things, a standard renters insurance policy is relatively affordable, averaging $215 per year. However, if finances are tight, some tenants may consider getting the cheapest policy possible to meet their landlord’s requirements. In this case, you may want to purchase residential liability insurance.
In this guide, we’ll break down everything you need to know about residential liability insurance, including what it covers, what it doesn’t cover, and how to know if it’s the right choice for you.
What Is Residential Liability Insurance?
A residential liability insurance policy focuses solely on protecting you against claims or lawsuits from others. Traditional renters insurance typically includes multiple types of coverage, such as protection for your own property. However, this type of policy specifically covers bodily injury and property damage to others that occur in your unit or due to your actions.
For instance, imagine someone slips in your bathroom and breaks their arm. If they were to come back and sue you for their medical bills, your liability insurance may cover any legal claims and damages. However, if your bathtub leaks unexpectedly and breaks all of your electronics on the floor, those costs would fall outside of the scope of your policy.
What Does Liability Insurance for Renters Cover?
Specific coverages can vary between insurance providers and plans. However, most liability policies include protections across several key categories.
Visitor injuries within your unit
If someone is injured while visiting your rental property, your liability coverage can help protect you and your landlord from financial responsibility. Whether a friend slips on a wet floor or a delivery person trips over a loose carpet, your insurance can cover their medical expenses and protect you from potential lawsuits.
Property damage to others
If someone is injured while visiting your rental property, your liability coverage can help protect you from financial responsibility. Whether a friend slips on a wet floor or a delivery person trips over a loose carpet, your insurance can cover their medical expenses and protect you from potential lawsuits.
Legal expenses
If someone decides to sue you or your landlord over an incident that occurred in your rental unit, liability insurance can be invaluable. Your policy typically covers legal defense costs, including attorney fees and court expenses, even if the lawsuit is groundless. It may also cover any resulting settlement or judgment up to your policy limits.
Pet-related incidents
For pet owners, liability coverage can be crucial. If your dog bites someone or damages property, your insurance can help cover the resulting expenses. However, it’s important to note that some breeds may be excluded, and you should always verify your specific policy’s pet coverage details.
Rental unit damage (for covered perils)
While your landlord’s insurance covers the building structure, your liability insurance can protect you if you accidentally cause damage to the rental unit through covered perils. For many policies, this limited list includes fire, smoke, and explosion.
Medical payments
Most liability policies include a specific amount for medical payments to others, regardless of fault. This coverage can help pay for immediate medical expenses if someone is injured on your property, often without requiring a formal liability claim or legal action.
What’s Not Included in Residential Liability Insurance?
Despite the benefits of liability insurance, it also comes with a significant number of exclusions.
Standard coverage components
Personal property protection
With liability-only coverage, you’re responsible for replacing or repairing your belongings if they’re damaged or stolen. Even if the damage occurs due to covered perils like fire, smoke, vandalism, or theft, liability-only coverage won’t help replace your belongings.
Additional living expenses
If your rental becomes uninhabitable due to a covered loss, liability-only coverage won’t help with any of the additional costs you’ll incur, such as:
- Temporary hotel or rental costs
- Additional food expenses (like restaurant meals)
- Extra transportation costs
- Storage fees for your belongings
- Pet boarding if needed
- Other reasonable expenses above your normal living costs
Liability coverage exceptions
While residential liability insurance generally covers property damage and bodily injury to others, there are still many scenarios it will not cover. It’s important to understand these exceptions to avoid unexpected gaps in your coverage.
Intentional or malicious damage
Any damage you cause deliberately isn’t covered by liability insurance. This includes situations where you knowingly cause harm to someone else’s property or person, engage in criminal acts, or participate in confrontations that result in damage. The basic principle is simple: if you meant to do it, your insurance won’t protect you.
Automobile-related incidents
Your liability coverage stops where your auto insurance should begin. Any incidents involving vehicles– whether they occur in your parking area, driveway, or anywhere on your rental property– fall under the domain of auto insurance.
This includes accidents, damage to parked vehicles, and any injuries resulting from vehicle-related incidents. Even if the incident happens on your rental property, your renters liability insurance won’t step in to cover these situations.
Business-related damages
The rise of remote work has made this exception particularly relevant. If you operate any kind of business from your rental property, your standard liability coverage won’t protect you from related incidents. This means if a client visits your home office and gets injured, or if your business activities cause damage to someone else’s property, you won’t be covered. This exclusion extends to all business operations, including home-based daycare services, which require their own specialized insurance coverage.
Your personal injuries
Liability insurance is specifically designed to protect you when others are injured, not when you hurt yourself. If you fall in your own bathroom, burn yourself while cooking, or suffer any other personal injury in your rental unit, your liability coverage won’t help with medical expenses. This exclusion extends to members of your household as well– your liability coverage is strictly for protecting you against claims from others outside your household.
Most building damages (except those caused by fire, smoke, or explosions)
When it comes to damage to the rental property itself, liability coverage is quite limited. While it does step in for specific scenarios like fire, smoke, or explosion damage, most other types of building damage aren’t covered.
This means if you accidentally put a hole in the wall, cause plumbing issues, or damage flooring during a DIY project, you’re typically responsible for the repairs. Normal wear and tear, pest problems, and general accidental damage all fall outside the scope of liability coverage.
Damage from floods or earthquakes
Natural disasters present another significant gap in liability coverage. If your unit experiences flooding that damages a neighbor’s property, or an earthquake causes your belongings to damage someone else’s possessions, your liability insurance won’t provide protection. This exclusion applies to all natural disasters, including storms, landslides, and other acts of nature.
Who Should Consider Residential Liability Insurance?
In many cases, a full renters insurance policy is well worth the investment– especially when you can get $20,000 in personal property coverage for only a couple hundred dollars per year. If you feel a renters insurance policy might be a good fit for you, we can help you get a quote today!
However, for young renters with minimal belongings, it may be worth it to save by only getting liability coverage. That way, you can fulfill your lease requirement and protect yourself from lawsuits without breaking the bank.
But before you make a decision to opt for the cheaper policy, it’s important to know what you have to lose. Take some time to create a home inventory list with a summary of your belongings and their estimated value. If it’ll cost more to replace than you have in savings, it’s probably best to get a standard policy.
How to Get a Residential Liability Policy
Once you’ve determined that you’re a good fit for a residential liability policy, it’s time to figure out where to secure it. Since many renters insurance companies don’t offer liability-only plans, you might need to shop around to find a provider, or click through our link below to get a quote.
You can also reach out to your landlord or property manager to see if they have any options available. Oftentimes, leasing offices will secure liability coverage for a unit in the event that a resident fails to provide their own. For that reason, you might be able to have them place their own insurance from the start. Just make sure that you understand the specifics about what’s covered under the policy.
