What is Rental Liability Insurance and Why Do I Need It?

When you shop for renters insurance, it’s important to make sure you choose the right amount of personal liability coverage. If you accidentally injure someone or damage their property, your rental liability insurance may save you tens of thousands of dollars, if not more, in out-of-pocket expenses. Here are the key things to consider as you decide on how much personal liability coverage to include in your renters insurance.

How does personal liability insurance work for renters?

Personal liability insurance for renters, also known as tenant liability, is insurance that covers injuries or property damage you cause. It’s one of the four main coverages in most standard renters insurance policies. These include:

• Contents coverage: Pays to repair or replace your belongings after a covered loss
• Additional living expenses: Covers above-normal rent and living expenses when a covered peril leaves your home temporarily uninhabitable
• Personal liability: Covers injuries and property damage you cause to others
• Guest medical expenses: Pays to treat injuries a visitor suffers in your home, regardless of fault

Renters insurance often comes with a default liability limit of $100,000, sometimes less, but you can usually increase your limit.

Personal liability insurance vs. renters insurance

As an alternative to getting personal liability coverage though renters insurance, you can purchase a standalone comprehensive personal liability insurance policy.

Though rare, standalone personal liability also covers injuries or property damage you cause. However, it does not include the other coverages that come with renters insurance.

What does rental liability insurance cover?

The personal or tenant liability insurance in your renters policy covers injuries or property damage you cause, including those that occur away from your home. Renters liability also often covers the costs of defending you in court if you are sued over a liability claim.

Common scenarios that personal liability insurance typically covers include:

• A guest breaks their leg in a fall down a cluttered, unlit stairwell in your unit
• Your child accidentally hits a baseball through your neighbor’s window
• A kitchen fire breaks out in your unit after you forget to turn off a burner

As third-party insurance, renters liability generally only covers other people’s expenses. If you fall down an unlit stairwell in your own unit, you are responsible for your medical bills.

Tenants liability vs. landlord liability insurance

While landlords typically also have insurance, their liability coverage usually only applies to injuries a guest suffers in your building’s common areas, such as an unlit staircase leading to your unit.

Your landlord’s insurance policy typically also covers damage to the building, but you can be held liable for damage you cause.

For example, if a tree falls on your building, your landlord’s insurance typically pays for repairs. However, if you cause a kitchen fire, you may be held financially responsible for some or all of the damage.

Renters liability vs. guest medical coverage

Though renters liability coverage is similar to guest medical coverage, there are key differences between them.

• Guest medical typically covers the initial medical costs for a visitor who gets injured on your property on a first-pay basis. If an investigation later determines that you caused the injury, your liability coverage kicks in.
• Guest medical only covers injuries occurring at your home. Personal liability includes coverage for qualifying injuries you cause away from your home.

Renters liability coverage for dogs and other pets

If you have a dog or other pet, you should check your renters insurance quote or policy for limits on liability coverage for dog bites or injuries your pet may cause.

Some insurance companies exclude injuries caused by a dog or other pets, or place a sublimit on the amount of coverage they provide. Some companies require customers to sign a dog-bite waiver that excludes coverage for injuries caused by certain “dangerous” dog breeds, such as pit bulls and Rottweilers.

Pet injury claims can get expensive. For example, the average price of a dog-bite claim in 2021 was $49,000, according to the Insurance Information Institute.

If your quote or policy contains a sublimit or exclusion for your pet, consider working with a different company or purchasing standalone pet liability insurance, which is available from certain specialty insurance companies.

Other common renters liability insurance exclusions

It’s also important to know that renters liability insurance does not cover injuries or damage that you cause while driving a car or operating a boat. The liability coverage in your car and/or boat insurance cover these activities.

Renters liability insurance also generally excludes injuries or damage that result from business operations, including a business you run out of your home. However, some companies offer an endorsement that adds liability coverage for approved home-based businesses.

How much does renters liability insurance cost?

Personal liability coverage is one of the cheapest elements of a renters insurance policy.

The average cost of renters insurance with a default liability limit of $100,000 costs about $10 to $30 a month, depending on where you live, your insurance company and other factors.

Increasing your liability limit $100,000 to $300,000 usually only adds $3 to $5 to your monthly insurance rate. Increasing it to $500,000 typically results in a similar additional price increase.

Learn more about the average cost of renters insurance and how the amount of coverage you choose impacts your rates.

How much rental liability insurance do I need?

A good rule of thumb for deciding how much rental liability insurance you need is to choose a limit that matches your net worth, unless your landlord requires a higher amount.

When you think about the high costs of medical treatment and the litigious nature of our society, it’s easy to see how quickly a liability claim can reach or exceed your policy’s default liability limit.

If your liability limit is not high enough to cover an entire claim, the injured party can come after your personal assets and/or garnish your wages to make up the shortfall.

Considering the relatively low cost of increasing renters liability coverage, a $300,000 limit is a good starting point for most people.

If you have more assets to protect or a high income, consider a higher liability limit or an umbrella policy. An umbrella policy adds to the liability protection you get from your renters and auto policies, as well as any other personal insurance you may have.

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