What is a “Comprehensive Personal Liability” (CPL) Policy?

A Comprehensive Personal Liability Policy (aka: a ‘CPL’) is often confused with a Personal Umbrella policy, but they are NOT the same thing.  Most investors assume the term ‘liability insurance’ is an all-encompassing one-size-fits-all coverage, but this is absolutely untrue.

An umbrella policy is designed to act as a second layer of liability protection after the limits in the underlying policy have been exhausted.

A CPL policy on the other hand is designed to provide ‘first defense’ for the insured in the absence of other liability coverage.

The reasons why many investors need CPL coverage are simple:

  • Most dwelling policies only contain ‘premises’ liability protectionNOT ‘personal’ liability.  This means that there may be coverage in the event of a property-related injury, but there is no coverage for ‘personal injuries’ such as wrongful eviction, invasion of privacy, slander and defamation, unfair housing, and so on;
  • Purchasing a CPL policy provides this missing ‘personal liability’ protection in order to compliment the ‘premises’ liability in the underlying dwelling policy;
  • If you are an out-of-state investor, you cannot usually extend the umbrella liability from the policy you purchased in your home state over the properties that you own in a different state.  This means that you NEED a CPL policy!

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