What Is Homeowners Liability Insurance?

What Is Homeowners Liability Insurance?

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated July 12, 2021

As a homeowner, you are liable for your premises. More specifically, you’re responsible for making sure that your home and the surrounding lot that it sits on is safe for yourself, your family, and anyone who visits. If someone is injured on your property because of your negligence, you could be held liable and face legal challenges. 

In order for you to be found liable, the injury or property damage must have resulted from your negligence. If you fail to ensure that your home is safe, you will be held responsible. But if the injury or damage to someone else’s property was the result of something other than your oversight, you won’t be held liable. 

Unfortunately, there are still times when you may have overlooked certain issues with your home that can eventually lead to someone getting hurt or their belongings being damaged on your property. Rather than being stuck having to bail yourself out of a legal battle, a homeowners insurance policy can help. More specifically, the liability portion of your policy can cover you for damages. 

What Is Homeowners Liability Insurance?

A standard homeowners insurance policy will cover you against personal liability. This portion of your policy will cover you against lawsuits stemming from an injury or damage to someone else’s property caused to others as a result of your negligence on your property. It also covers you against liability resulting from injury or damage caused by your pets. 

For instance, if a person slips as a result of an icy walkway or falls because of a loose handrail, they could get injured. And if that happens, it will be deemed your fault, as these are issues that could have been avoided had you salted your walkway or repaired the handrail. If the person injured chooses to sue you for damages, you could be left with a hefty legal bill to pay. 

However, a liability insurance policy will cover the costs of these legal fees, as well as any medical bills that the injured person incurs as a result. 

Homeowners liability insurance is unique in that no deductible is required to be paid before your policy kicks in. This differs from traditional coverage in which a deductible will need to be paid first before your insurance company covers the cost of losses suffered in the event of damage to your home or its contents. 

What Is Covered Under Homeowners Liability Insurance? 

The personal liability component of your homeowners insurance policy protects you from financial losses as a result of your negligence. It will typically cover the following:

  • Costs to repair another person’s belongings
  • Medical costs of an injured person
  • Legal costs to pay a lawyer to defend you in court

For instance, if someone is bitten by your dog, the personal liability portion of your homeowners insurance policy will cover the cost of medical care for the individual injured. And if the person takes you to court as a result of their dog bite, your policy will cover legal expenses. 

Your policy will also protect your valuable assets, including your home, bank accounts, investments, and other personal property. If you are ever taken to court, these assets are up for grabs to help cover damages. If you have adequate liability coverage, these assets will be protected.

Common occurrences of personal liability claims include the following:

  • Slipping in icy ground
  • Falling debris, such as tree branches
  • Accidents involving swimming pools
  • Tripping on items left on the floor, loose carpeting, or damaged hardscaping
  • Injury sustained after guests being served alcohol

What Is Not Covered By Homeowners Liability Insurance? 

A homeowners insurance policy does not cover all scenarios that involve bodily injury or property damage to another person that you are responsible for. These policies usually contain exclusions, so you’d be well-advised to get familiar with the details of your coverage.

Generally speaking, homeowners liability insurance may exclude the following:

  • Liability as a result of a car accident. 
  • Injury or damage to property caused by an intentional act by you or a family member.
  • Injury or damage to property to yourself or other family members in your home. 
  • Injury or property damage as a result of business being conducted by you in your home. 

Benefits Of Homeowners Liability Insurance

While you may be doing everything you can to make sure your home is a safe place for you, your family, and those who visit, it’s always possible to overlook something or to lose control over a certain issue. In these unfortunate cases, you won’t have to worry about having to pay exorbitant legal fees to have your valuable assets put at risk. 

A homeowners liability insurance policy can afford you with the following benefits:

  • Protects your current and future assets
  • Covers expensive legal fees if you are taken to court
  • Protects issues that stem from negligence from others within your household (including your pets)

Is Homeowners Liability Insurance Included In Regular Home Insurance? 

The majority of home insurance policies offer some level of personal liability coverage. The amount of coverage you get will depend on the exact home insurance policy you have, and the coverage amount will impact the cost of your premiums

There are 4 main types of homeowners insurance:

  • No frills policy – covers properties that are ineligible for typical insurance standards. 
  • Standard policy – covers insured perils that are specifically named in the policy, such as events that may place your property at risk.
  • Comprehensive policy – a mid-tier policy that offers more coverage than a standard policy but less than a comprehensive policy. 
  • Broad policy – covers the structure of your home, all risks, and personal liability.

How Much Coverage Do You Get Under Homeowners Liability Insurance? 

Most homeowners liability insurance policies offer $100,000 of coverage at minimum, but you can always increase that amount if you wish, since medical bills and legal fees can add up quickly. Increasing your coverage amount, however, will come with higher premiums.

Every insurance company will offer different liability policy minimums and maximums in terms of coverage amount. Plus, your financial profile will dictate how much you can afford to spend on a homeowners liability insurance policy, so you may want to comparison shop and obtain quotes from various insurers based on how much liability coverage you want. 

Final Thoughts

Having a home insurance policy is a great way to protect you financially in the event that your home is damaged, its contents are stolen or ruined, or you find yourself in a legal situation with high financial stakes. The liability portion of your policy can help cover the costs of hiring a legal team if you’re ever taken to court, as well as any medical bills that another person has incurred after being injured on your property. Liability insurance can provide you with peace of mind knowing that if something happens on your property, you’re covered. 


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Priyanka is a personal finance expert at Loans Canada. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives. She has taken financial control of her life by using Mint to budget and track her expenses while growing her wealth by investing through Wealthsimple. She also believes in having an emergency fund, so she keeps a good sum of money in an easily accessible high-interest savings account. She also uses the American Express Cobalt Card to earn points on all her purchases, further fueling her savings goal. She also uses Loans Canada’s lender directory whenever she wants to compare rates from different lenders.

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