Definition of Liability Insurance
Liability insurance is a relatively inexpensive way to protect an individual or business from lawsuits stemming from malpractice, bodily injury, or negligence. Given today’s shaky economic climate, it’s more important than ever to ensure your assets, like your home and other investments, are well protected. These insurance policies generally cover payouts to the claimant and any associated legal costs to the insured. Keep in mind the vast majority of liability policies will not cover either intentional damage or contractual liability. Let’s examine the three primary forms of liability insurance: business, personal, and auto.
Business liability insurance is a legally required and essential component to any business insurance policy. Simply put - a business liability policy will shield a company from third party claims. For instance, should a manufacturer’s product cause harm or bodily injury to its customer, the liability policy will cover the businesses’ payouts to the injured party (or parties) and cover the policyholder’s legal fees.
Malpractice insurance is considered a form of liability coverage for practitioners. Malpractice policies make up a large component of the business liability insurance market. Malpractice insurance is generally very costly because of the frequency and astronomical costs associated with malpractice lawsuits in this country. Because of this very real legal threat, practitioners are wise to make sure they are well covered under their policies.
The next type liability insurance coverage is Personal Liability. These policies offer the policyholder protection should either you or a member of your household, accidentally injure someone or cause damage to their property. Personal Liability coverage also protects the policyholder if someone, like a handyman or houseguest, is injured on your property. Even though homeowners and automobile policies do offer liability coverage, oftentimes this limited liability protection will not be sufficient for every situation. Evaluate the value of your home and other financial assets to make sure your current policy is sufficient, if not you might want to consider purchasing an additional Umbrella Personal Liability policy.
The last category of liability insurance coverage is Auto Liability. Liability is included in all auto policies and generally costs less than other auto insurance components like collision or uninsured motorist. Simply put - the reason for the lower cost is Auto Liability covers less. The policyholder is covered for damage to property or a person. With this coverage, the auto insurance company is only responsible for the other parties’ losses and not the drivers. Keep in mind, as with any part of your auto coverage, the better your driving record the lower your Liability Auto insurance costs will be.
Make an inventory of your assets and evaluate how much liability coverage you currently have. It’s important to know that you and your family are adequately protected. You never know when the unexpected will show up at your front door.
