Liability Coverage: What You Should Know

Insurance provides vital financial protection to you, your family, your property, or your businesses. However, some insurance policies might not provide adequate coverage for incidents like legal suits and negligence. Liability insurance gives you that extra safeguard that other policies cannot. Here is an overview of liability coverage and options you can choose from.

Overview of Liability Insurance

Liability insurance is a type of insurance policy that protects the policyholder if they are sued for damages they have caused to another person. The policy will cover the costs of the legal defense and any damages that may be awarded to the plaintiff in a civil lawsuit.

Liability insurance will typically cover damages that are the result of negligence on the part of the policyholder. This coverage can include car accidents, slip and fall accidents, and other accidents where the policyholder is at fault. However, it will not cover intentional acts or damages that are the result of criminal activity.

The benefits of liability insurance include peace of mind due to financial protection. Financial protection might help you if you find yourself in an expensive legal suit or if you are responsible for damages or injuries caused by your negligence. It can also help you avoid bankruptcy or other forms of financial ruin in case of a large judgment against you.

Some limitations to liability insurance include limits on the available coverage and exclusions for certain types of damages or injuries. Special business considerations include choosing the right type and coverage and ensuring that your employees receive proper training to avoid liability claims.

Types of Liability Insurance

Liability insurance can cover numerous scenarios and litigations that might affect your personal or commercial interests. Here are some of the major types of liability insurance.

Public Liability

Public liability protects businesses and individuals from claims that arise from injuries or damage caused by the insured party. The coverage is designed to protect the insured from claims resulting from their negligence or recklessness. Public liability insurance can be purchased as a standalone policy or as part of a business owners policy (BOP).

Product Liability

Product liability insurance protects a company against claims that result from injuries or damage caused by a defective product. It can cover damages awarded in a court judgment and the costs of defending the business in court.

Employers Liability and Workers Compensation 

Employers liability protects businesses if an employee becomes injured or ill due to work. On the other hand, workers compensation insurance provides benefits to members of personnel that get injured or sick due to work.

Management and Employment Practices Liability

Management and employment practices liability coverage protects organizations and employees from lawsuits alleging wrongful employment practices. These lawsuits can include allegations of discrimination, sexual harassment, wrongful termination, and more. This coverage can help pay for legal defense costs and damages if your organization is sued.

Umbrella Liability

Umbrella liability coverage protects individuals or businesses from large, unexpected claims or lawsuits. It can protect above and beyond the limits of your underlying insurance policies, such as your auto or homeowners policy. Umbrella coverage typically kicks in when you have exhausted the liability limits on your other policies. Umbrella coverage does not replace your other insurance policies; it provides additional protection.

Comprehensive General Liability

Comprehensive general liability insurance, also known as CGL, is a type of insurance that businesses purchase to protect themselves from liability for various risks, including property damage, personal injury, and advertising injury. This type of coverage typically includes four main forms of coverage: bodily injury liability, property damage liability, personal and advertising injury liability, and medical payments.

Liability coverage is right for you if you transact significant amounts of capital, have a business, or just want extra insurance. Speak with us at The Policy Center to learn more about and purchase a liability insurance policy.