What is Liability?
Legal responsibility for causing harm or damage to another person or their property.
Understanding Liability
Liability insurance protects you financially when you're legally responsible for injuries or property damage to others. It covers legal defense costs, settlements, and judgments against you. Liability coverage is a fundamental part of auto, home, and business insurance.
Examples
- If you cause a car accident, your liability coverage pays for the other driver's injuries and vehicle damage.
- If a guest slips on your icy sidewalk and breaks their arm, your homeowner's liability covers their medical bills.
- Business liability covers customer injuries on your premises or from using your products.
Common Questions About Liability
How much liability coverage do I need?
A common recommendation is to have liability coverage at least equal to your net worth, since you could be sued for everything you own. Many experts suggest minimum auto liability of $100k/$300k and umbrella coverage of $1-2 million.
Does liability coverage protect me or others?
Liability coverage protects you by paying claims made against you by others. It covers the other party's damages when you're at fault. Your own injuries or property damage are covered by other parts of your policy.