Define Liability Insurance
- Liability insurance is designed to make injured people and property whole without financially devastating the insured; however, it typically does not cover any property damage or bodily injury sustained by the policyholder. In the case of businesses and homes, liability will pay, no matter which party is at fault. With all types of liability insurance, the policy sets forth the financial limits, which may be increased with greater expense to the policyholder.
- Automobile liability car insurance assumes the financial burden for drivers who are involved in car crashes or other vehicle-related damage caused by the driver. This type of liability provides financial indemnity against property damage, bodily injury and/or death. The exclusionary aspect of automobile liability insurance is that it will not provide financial coverage for any personal injury sustained by the driver nor any passenger in the driver’s vehicle, and it will not cover any damage sustained to the driver’s vehicle.
- Certain professions have a high rate of litigation stemming from client dissatisfaction, which may or may not be due to bad behavior on the part of the policyholder. Sometimes referred to as malpractice insurance, especially where doctors are concerned, or errors and omissions insurance, where lawyers are concerned, professional liability insurance indemnifies the insured against financial liability as a result of legal claims against professional work.
- Business owners who have customers visiting their place of business regularly have the risk of litigation stemming from several areas, including potential bodily injury (slip and fall or other physical harm), property damage and injury to reputation (slander or false advertising), all of which can be covered by a general liability insurance policy. General liability insurance (also referred to as a business owner’s policy) will cover legal fees as well as damages, except for any punitive damages.
- When consumers are harmed by food or medication (even if they have been tampered with after being on the store shelves), or when a defect in a mechanical product causes harm, the manufacturer or distributor can be liable for any damages. Product liability insurance provides financial protection to companies for personal injury and/or property damage and other expenses sought in legal proceedings against a company related to the usage of its products.
- A homeowner’s insurance policy may not be typically considered a liability policy, but a great portion of what it protects the insured from is liability stemming from personal injury accidents on the property, physical damage and/or loss of personal property of others while on the insured’s property, as well as other types of damage, including damage of the actual home due to disasters.