How Much Personal Liability Coverage Should You Carry?

If someone were injured at your home, or you accidentally caused damage to someone else’s property, would your current insurance limits be enough to protect you financially? Personal liability insurance helps cover legal fees, settlements, and medical costs — but only up to the limit you’ve selected. Choosing the right amount is key to protecting your savings and avoiding out-of-pocket surprises.

This matters when you’re assessing your overall insurance plan. It becomes especially important as your responsibilities grow, your assets increase, or your lifestyle brings more interaction with others.

What Does Personal Liability Coverage Actually Pay For?

Personal liability insurance covers your financial responsibility if you unintentionally cause bodily injury or property damage to someone else. It also pays for legal defense costs if a claim or lawsuit is filed against you.

Coverage typically applies to incidents that happen:

On your property (slips, falls, or accidents involving guests)
Away from home (such as damaging a friend’s property)
Involving your pets or children
In vacation rentals or during travel

This is included in most homeowners, condo, or tenant insurance policies, and can be increased to higher limits for a relatively low cost.

Typical Coverage Limits and What They Mean

Most property insurance policies come with a default personal liability limit of $100,000. However, this may not be enough to cover a serious injury or a lengthy legal battle. You can usually increase your coverage in increments of $100,000, with many households opting for $300,000 or $500,000.

Here’s how the differences break down:

Coverage Amount	Best Suited For	Why It Matters
$100,000	Minimal protection, often the default	May not cover hospital bills or legal fees in a major incident
$300,000	Moderate coverage for homeowners or families	Covers more serious claims or extended medical care
$500,000+	Higher-income earners or property owners	Provides stronger defense against large lawsuits
$1 million or more	High-net-worth individuals or those with multiple properties	Considered a bridge to umbrella insurance for larger asset protection

Increasing your personal liability limit is often inexpensive compared to the risk it covers. A higher limit can cost just a few extra dollars per month — but can protect hundreds of thousands in assets.

Factors to Consider When Choosing Your Coverage

How much coverage you need depends on several personal and financial considerations. You may want to carry a higher limit if:

You own your home, especially with significant equity
You have retirement savings, investment accounts, or valuable property
You host guests or social gatherings regularly
You have children, pets, or live in a shared building
You are involved in volunteer work, coaching, or serve on a board
You have a public profile or may be perceived as having deep pockets

While no one plans to be sued, liability claims often arise from accidents. A simple fall, an unintentional comment, or an excited dog can lead to legal claims that exceed basic coverage.

Tip: If your assets total more than your insurance limits, an umbrella policy can add another layer of protection starting at $1 million.

Choosing Protection That Matches Your Life