DEFINITION of ‘Comprehensive Personal Liability’
A component of a homeowners or umbrella insurance policy that protects the policyholder and members of the policyholder’s household against having to pay large sums out-of-pocket if they are held responsible for a personal liability claim. Comprehensive personal liability coverage will pay for covered losses if a third party claims bodily injury or property damage that the policyholder is found responsible for.
INVESTOPEDIA EXPLAINS ‘Comprehensive Personal Liability’
Homeowners policies usually provide a maximum of $100,000 to $300,000 in personal liability coverage. Umbrella policies pick up where these limits leave off and provide comprehensive personal liability coverage of $1 million or more. They also cover certain liability claims that homeowners insurance may not, such as libel, slander and invasion of privacy.
Comprehensive personal liability covers you if someone sues you for incidents like these:
-Your dog bites a visitor to your home.
-The mailman slips and falls in your driveway.
-You’re found at fault for an expensive car accident.
-Your child accidentally burns down his friend’s parents’ home after leaving a lit cigarette unattended.
If your homeowners policy limits are lower than the injured party’s claim and you have an umbrella policy, the umbrella policy will pick up where the limits of your homeowners policy leave off. For example, if your personal liability coverage under your homeowners insurance maxes out at $300,000 and you have a personal liability umbrella that maxes out at $1 million, if you’re sued for $800,000 for a covered incident, you’ll first pay your homeowners insurance deductible, perhaps $1,000. Then, your homeowner’s insurance will pay the next $299,000 of the judgement, which gets you to that policy’s $300,000 maximum. The umbrella policy will pay the remaining $500,000. You won’t have to come up with that half million from your personal assets thanks to your high amount of comprehensive personal liability coverage.