Renters Liability Insurance Explained

Renters liability insurance is a coverage that’s included in a standard renters insurance policy. Its purpose is to protect the policy owner from lawsuits and pay for damages caused to other people or their property.

Most renters liability policies include $100,000 of this coverage built in, according to the Insurance Information Institute (III). But you can ask for more renters liability coverage, or even add a stand-alone liability policy if you need it.

This article will address the most common questions fielded by insurance agents about renters liability insurance. After reading this article you will understand:

• Renters liability insurance definition
• Policy limits of renters liability insurance coverage
• What is covered by renters liability insurance?
• Renters liability insurance for pet owners
• Renters liability insurance vs. Renters insurance
• How to buy renters liability insurance coverage

Let’s begin with some renters liability insurance definitions.

Renters Liability Insurance Coverage: Terms to Know

To understand liability insurance for renters, let’s get a clear understanding of some terms.

Here, we’ll explain:

• Liability
• Negligence and reasonable behavior
• Material statements
• Damages
• Policy Limits
• Slander and libel
• Legal action, lawsuits and attorney costs

Understanding Liability

In the realm of insurance, liability means legal responsibility. When physical accidents or injuries happen at a rental property, that responsibility often lies with the landlord. But sometimes these issues are the renter’s responsibility. We’ll take a closer look at some examples in a moment.

Reasonable Behavior and Negligence

Insurance companies expect every renter to behave in a reasonable and lawful manner. A reasonable person wouldn’t keep a rattlesnake as a pet. Nor would they build a meth lab in their kitchen. Damage caused by dangerous exotic pets or illegal activity is not covered by renter’s liability insurance, because it’s not reasonable behavior.

Negligence means failure to act in a reasonable way. A reasonable person keeps their dog on a leash and keeps their home free of dangerous explosives.

Insurers also expect customers to be honest about their lifestyle, and what goes on in the home.

Material Statements

Insurers need customers to be honest about the issues that matter most. In the world of insurance, “material” means “something that matters.”

For instance, if you supply professional childcare or daycare services in your apartment, this is something an insurer needs to know. You probably need more comprehensive business liability insurance, because you’re running a business.

While your renter’s liability insurance would normally help pay for injuries a child received in your apartment, it’s not business insurance, and won’t cover your liability as a daycare center.

Understanding Damages

Damages are provable expenses after a personal injury or property injury. Renter’s liability coverage will help pay for proven damages, up to the policy limits, of course.

So, if a person comes to your rented property and is injured due to your negligence, they’ll need to supply their medical bills, prescription costs, proof of missed work and so on to your insurance company, to be compensated for them.

But remember, many personal injury cases that happen at a rented property are the landlord’s responsibility. So, landlords should have liability insurance for rental property in the form of a commercial property policy or landlord protector policy.

It is your landlord’s responsibility to keep the property, and issues like:

• Broken porches
• Rotting steps
• Wobbly railings
• Dead trees or dangerous broken tree limbs

Failure to keep a rental property is considered negligence – it’s not acting reasonably. If a visitor to the rental property is injured thanks to a porch that collapses, it’s the landlord insurance, not your renter’s liability insurance policy, that will be called upon to pay for damages.

But if your cat scratches a baby, that’s another story (and we’ll tell it in a moment.)

Sometimes damages are more difficult to prove, like pain and suffering, loss of business or a damaged reputation. These types of damages are usually associated with slander and libel – issues that are covered by renter’s liability insurance.

Slander, Libel and Renters Liability Insurance

Slander and libel are false and defamatory statements, made to damage someone’s reputation. They can be written (libel) or spoken (slander). They can be shared on social media, too.

Usually when we hear about slander or libel, we think about damage to a business. But in our modern world of Facebook, Instagram, Tik Tok and viral videos, it’s important to remember that we are responsible for statements we make and share.

Renters liability insurance will help pay for lawsuits for slander / liability, but it’s best to avoid them. Remember, liability coverage will only pay up to pre-determined amount. And the costs of lost business can add up rapidly. So be kind online, and make sure that you (and your teenager) only share provable true information about a business.

Policy Limits of Renters Liability Insurance Coverage

As we mentioned above, most renter’s insurance policies include $100,000 of liability coverage. And many tenants feel this is enough coverage.

When an injury to someone else is your fault, or if you cause damage to someone else’s property by accident, your renter’s liability insurance coverage will only pay up to that pre-set policy limit. Any damages beyond that $100,000 will be your responsibility.

“Is $100,000 enough renters liability coverage?”

The answer depends on your assets, or your net worth. A 22-year-old college student with a $4,000 Toyota Corolla and $1,900 in the bank will be well-covered with that much renter’s liability coverage.

But individuals with a higher net worth (more money and assets) might need more liability coverage.

• Maybe you’re renting an apartment while going through a divorce.
• Or perhaps you’re a senior citizen, downsizing into an apartment while your heirs move into the big family home.

In those instances, you’ll be better served with a higher limit of liability, in the $300,000 or $500,000 range. And if you’re a landlord who lives in an apartment while you rent out several homes, you should consider an umbrella policy, too.

Remember, your renter’s liability insurance coverage will pay for the damage you cause to others, and it can pay for most of the legal help you’ll need during a lawsuit, too.

Renters Liability Insurance Pays for Lawsuits and Attorney Fees

Your renter’s liability insurance coverage is designed to protect you, financially, in case of a lawsuit. It will help pay for attorney fees and pay for settlements. Know that the insurer may choose to settle a case (pay an accuser) rather than pay ongoing court costs.

Now that we have a better understanding of the language associated with renter’s liability insurance, let’s think about how it works. Specifically, let’s think about renter’s liability insurance for pet owners.

Renters Liability Insurance is Essential for Pet Owners

No one wants to imagine a lawsuit, but let’s go there.

Toddler vs. Fluffy the Tabby Cat

Imagine you’re being sued by your neighbor, because your sweet tabby cat “Fluffy” scratched a toddler’s eye. It was an unusual accident. Somehow your neighbor’s child was wandering around the apartment complex unsupervised. The little darling picked up your cat by his tail, and Fluffy went crazy!

Fluffy scratched the child’s face and did a lot of damage to the child’s corneas, eyelids and tear ducts.

The toddler shouldn’t have been left alone, and your Fluffy shouldn’t have been outside alone either.

But it happened, and thankfully you have renter’s liability insurance.

After the accident, the toddler was immediately treated at the emergency room. He’s visited several pediatric vision specialists, too. The little darling might be temporarily blind, or he might lose vision in one eye permanently. So far, the medical bills are in the tens of thousands, and the child is now terrified of cats.

You can see how this would be an absolute tragedy for the child’s family.

The toddler’s parents are suing you for:

• $30,000 in medical bills and eye doctor visits
• $5,000 in missed work, because they’ve needed to take the little darling to ongoing appointments
• $10,000,000 in psychological damages, a fear of cats, ongoing blindness and “pain and suffering”

While a standard renter’s policy – with $100,000 of liability coverage – will surely cover the provable damages of medical bills and missed work, the $10 million becomes an issue. Pain and suffering are hard to prove, as is a lifelong fear of cats.

In this case, your insurer will probably offer to settle.

• The insurance company offers to pay $35,000 of damages, plus $50,000 to the parents.
• If the parents demand more, this case might go to court.
• Your renter’s insurance will help pay for an attorney in that situation, though again, a settlement would probably be the cheaper and faster choice.
• And your insurer will only pay up to the policy limits.

This is a situation where $100,000 of liability coverage should be enough – unless you happen to have a lot of assets that could be lost in a lawsuit.

“What if Fluffy scratched a kid, but I don’t have renter’s liability insurance coverage?”

In a situation like this, the parents will probably try to sue the landlord next. After all, a landlord should keep some type of liability insurance for rented property.

And that’s why so many apartment complexes and property management companies now require tenants to carry a minimum of $100,000 renter’s liability insurance coverage. It protects the landlord from getting sued, sometimes.

Some Pets are Difficult to Insure with a Renter’s Policy

Unfortunately, we live in a litigious era – lawsuits are common. And they’re especially common for certain dog breeds that are considered dangerous, based on injury statistics.

From 2010 through June 2021, there were 430 fatal dog bites in the US. The lion’s share of them is attributed to pit bulls. So, most insurers refuse to cover pit bulls, but also Dobermans, Rottweilers and German Shepherd type dogs. (And most landlords don’t allow them at a rental property, either.)

If you have a dog that could be considered dangerous, you must disclose it to your insurer – it is material information. The insurer might choose to exclude the dog from your policy. If that “dangerous breed” dog does attack someone, it will be your responsibility. The insurer won’t cover the incident.

Exotic pets, like dangerous snakes, wolf hybrids and wildcat hybrids are also generally uninsurable with a renter’s insurance policy.

So far, we’ve covered renter’s liability insurance coverage definitions and terms, typical limits of liability, how renter’s liability coverage works for “safe” pets (but not rattlesnakes or pit bulls). Let’s switch gears and compare renter’s liability insurance coverage to renter’s insurance and talk about the costs.

Renters Liability Insurance Coverage vs. A Renters Insurance Policy

A renters insurance policy is built on the notion of contents coverage. Renter’s policies protect your belongings against covered perils like fire, smoke damage, theft and so on.

Some perils might not be covered – like a flood or earthquake. But every renter’s insurance provider will have a different contract, so read your policy carefully or talk to a licensed insurance agent to learn about covered perils.

Renters liability insurance coverage is usually included in your renter’s policy, and it usually starts with $100,000 of coverage. Tenants can buy more coverage from their insurer, or buy stand-alone liability policies if they need more liability protection

How to Buy Renters Liability Insurance Coverage

We’ve seen renter’s insurance available on the market for as little as $25 per month for $25,000 contents coverage and $100,000 liability coverage. The more contents you have, and the more assets you need to protect, the more insurance you should buy.

It’s easy to buy renters insurance, and the liability coverage that’s included with it.

Many well-known, national companies offer it, such as:

• Geico
• Progressive
• Travelers
• And Allstate, to name a few

You can shop for these insurance policies online or contact a local broker.

You’ll need to provide them with some basic information like:

• Your name, age and birthdate
• The address of the rented property
• Any claims history
• A list of people and pets living in the home

Prices can vary from one company to the next, so it’s a good idea to shop around. Get several quotes and review the competitors’ prices every few years.

Make sure you’re comparing apples to apples, though. You want to insure all your belongings and get the highest limit of liability possible for your money.