What is liability insurance coverage?
Liability insurance coverage helps protect you financially if you're responsible for someone else's injuries or property damage. If you're legally responsible for an accident or incident, liability coverage may help pay for medical bills, property repairs, or legal expenses, up to your coverage limits. However, it doesn't cover your own injuries or property.
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What does liability insurance cover?
Depending on the policy and situation, liability coverage generally helps pay for costs related to:
- Bodily injury to others, such as medical expenses or lost wages
- Property damage to someone else's belongings, home, or vehicle
- Legal defense costs if you're sued
Keep in mind that liability insurance coverage doesn't cover your own injuries or damaged property. It only applies in situations where you're legally responsible for someone else's injuries or damages.
Watch our guide to liability coverage for some quick snippets on how it works, what it covers, and more:
Types of liability coverage
Whether you own a home or business, drive a motorhome or motorcycle, or simply want protection as a renter, liability coverage may help protect you if you're liable someone else's injuries or damages.
Liability coverage for motor vebohicles
Bodily injury and property damage liability coverage under an auto, motorcycle, or motorhome policy helps cover injuries or property damage you cause to others while operating a motor vehicle. If you're at fault in an accident, this coverage may help pay for the other party's medical bills, vehicle repairs, legal expenses, or other related costs.
Nearly every state requires drivers to carry a minimum amount of liability coverage before you can drive a car or a motorhome or ride a motorcycle. Find out more about liability coverage for each type of vehicle:
Liability coverage for boats
While liability coverage for watercraft is only required by law in three states, certain marinas may require you to have liability coverage if you dock your boat there.
Liability coverage for homeowners, condo owners, and renters
Personal liability coverage may pay for injuries that happen on or away from your property or at your residence if you're found legally responsible. It may also help pay for damage you cause to someone else's property as well as legal expenses.
- Homeowners liability coverage
- Condo liability coverage
- Renters liability coverage
General liability coverage for businesses
General liability coverage helps protect your business when customers or third parties claim injury or property damage. If someone is injured at your business or claims your business damaged their property, this coverage may help cover related costs.
Leases, client contracts, and vendor agreements often require businesses to carry liability coverage. The amount you choose depends on the industry, the services you provide, and the risks of your business. This coverage can be purchased separately, or it may be combined in a business owners policy (BOP).
Learn more about general liability coverage for businesses.
How to determine the right amount of liability coverage
Regardless of the type of policy, your liability coverage limit should be at least enough to protect your net worth in case you're sued. You can figure out your net worth by adding up all of your assets including checking, savings, and money market accounts, and property equity, and then subtracting your debt.
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