It can happen so quickly: You knock over an expensive vase in your vacation home or drop a friend's TV set while moving. In such cases, personal liability insurance comes into play. This article shows how it works.

Sense and purpose of private liability

A classic in the insurance industry: Let's assume that your soccer-mad son has accidentally demolished the neighbor's panorama window on his way to a professional career. In order not to endanger the friendly relationship, your savings account would have to be used, because according to american law, private individuals are liable to an unlimited extent with their private assets for damages that they (or in this case: their children, for whom they are responsible) have caused negligently. Fortunately for those who have personal liability insurance, it protects you and your family against claims from third parties as soon as the injured parties assert their claims for damages and the question of guilt could be clarified to your disadvantage.

Covered claims of private liability

Personal liability covers the typical risks of everyday private life and primarily covers:

• personal injuries
• Property damage
• financial losses
• damage to rented property

The following types of damage, among others, are included:

• Gradual damage (damage that occurs over a long period of time),
• loss of keys
• Loss of receivables coverage
• Risks associated with herding other people's dogs
• Water damage

Claims not covered

Certain risks are not covered by private liability insurance. This applies in particular to damages

• from the keeping of certain pets such as dogs, horses, cattle or other draught and riding animals (a special animal owner's liability insurance comes into question for this)
• around one's own home and property (this is covered by the homeowner's and landowner's liability)
• by an oil tank (water damage liability applies here)
• to objects or persons, which occurred in connection with the professional activity of the policyholder (not including responsible honorary activities)
• from the non-performance of contractual services
• from construction projects on own property, if the sum insured exceeds 50,000 dollars (in this case a builder's liability insurance is recommended)

Breaches of the law and cyber damages are not covered

Excluded from insurance coverage are all deliberate actions to interfere with other people's networks (hacker attacks), the creation and development of destructive or predatory software (viruses, Trojans), the sending of spam mails and the use of files that illegally collect certain data (cookies). Deliberate criminal acts beyond this scope are also excluded from the coverage of a personal liability insurance.

Consider important special clauses

Most personal liability insurance policies cover the cases already mentioned by default. However, there are certain special clauses that are only included on request. However, they also only offer themselves in special life situations or in certain cases.

Special clauses depending on life situation

For students, the campus clause is indispensable. It covers damage that may occur to teaching equipment at the university. As a homeowner who likes to borrow the hedge trimmer from the neighbor, your personal liability should also cover borrowed items. If you're a particularly helpful type who enjoys helping with a move, your policy needs to include what's known as courtesy damage if you accidentally drop a friend's expensive flat-screen TV.

When bad debt coverage is a good idea

Let's say someone causes you damage, but they can't meet your claims for compensation because they're not insured and because their personal assets aren't sufficient - then in case of doubt you're left with the consequential costs. These can be hospital costs, for example, which you suddenly have to pay yourself. Unless your own personal liability insurance includes so-called bad debt coverage. Then your own insurance would pay for your damage, although you are not the causer but the injured party. However, it will only cover you if the damage was caused by negligence. If intent was involved, most personal liability insurers will refuse to pay. Nevertheless, bad debt coverage is a sensible addition to your personal liability insurance, especially since it changes the premium amount only minimally at most. However, this clause is not included in every private liability tariff, but must usually be booked separately.

Costs of a private liability insurance

The amount of the premiums depends on different factors: If you only insure yourself, a cheaper single tariff comes into question. If you want to insure your whole family, you have to reckon with higher rates. The deductible, the amount of which you can adjust yourself when you sign the contract, also has an effect: The more you are willing to pay out of your own pocket in the event of a claim, the lower the insurance premium.

A family insurance policy with a 250 dollars deductible and a sum insured of 50 million dollars for bodily injury, property damage and financial loss is available for an annual premium of around 50 dollars.

Sensible coverage amounts for private liability insurance

Private liability insurance only compensates for damage up to the contractually agreed coverage amount. If the damage incurred exceeds this, the insured person must pay the difference himself. Personal injuries in particular can quickly reach an amount in the millions. For this reason, it is important to set the coverage amount as high as possible right from the start. In most cases, this increases the insurance premium only marginally. For personal injury and property damage, a minimum sum insured of 5 million dollars is recommended. However, the higher the better. Many insurance companies offer lump-sum coverage of 10 million dollars and more at reasonable premiums.

Take out personal liability insurance that fits your needs

Particularly in the case of private liability, there are many stumbling blocks in the form of unclear clauses and insurance conditions. Which insurance elements are relevant to you depends primarily on your life situation. Whether you want to review an existing insurance policy or take out a new one, our insurance specialists are there to support you with their expertise. They compare the benefits of different providers with those of your current personal liability and analyze whether the current insurance product suits you.