Liability insurance is a component of the overall insurance scheme of risk finance to guard the buyer against the potential risks of personal liabilities imposed by lawsuits as well as other claims and protects both the insured and the insurer if the buyer is sued for such claims which come within the ambit of the insurance coverage.
It covers medical and dental care, property damage, public liability and motor vehicle liability. Liability insurance provides the necessary coverage for all these aspects and more. The insurance contracts are generally drawn up between the insurance company and the individual or the business firm, on the one hand, and the customer or the buyer, on the other. It is advisable to discuss the liability insurance with an expert before signing on the dotted line.
There are four types of liability insurance, namely, bodily injury liability, property damage liability, motor vehicle liability and legal liability insurance. Bodily injury liability is the one which takes care of all the costs relating to an insured’s personal injuries sustained in the course of any accident. Property damage liability is concerned with the expenses relating to repairing or replacing the property affected by an insured’s fault.
Motor vehicle liability and legal liability insurance are designed to provide coverage for possible legal suits on the part of third parties who may injure the person or damage the property of an insured. Liability coverage also covers any payment made to another person due to injury or damage to property, either financially or legally. The amount of liability provided is relative to the extent of the risk involved.
It is better to have the minimum liability insurance level of $1 million to secure your personal property and protect yourself in the event of any mishap. You can increase the level of your liability insurance coverage as per the requirements of your car insurance company. If the amount of coverage provided by your auto car insurance company is inadequate, you can get additional coverage from a liability insurance broker. However, it is very important that you do not take up any additional liability insurance cover just to get extra money.
There are different types of liability insurance available in the market and these include bodily injury liability insurance, property damage liability insurance and motor vehicle liability insurance. Bodily injury liability insurance provides coverage for people injured in the course of driving your automobile. Property damage liability insurance provides coverage for damages to real or personal property of an insured caused by insured accidents.
These types of policies also cover medical payments, which are paid by the policy-holder to any other person or persons injured in the event of an accident. The comprehensive coverage of liability insurance will pay for any repair to the automobile of an insured that becomes unusable due to any reason. There are certain comprehensive coverages that have maximum limits. Generally, comprehensive coverage policies cover the repairs to the car and the replacement of parts of it that become damaged.
Liability insurance also includes special limits for employers. These limits may help cover liability costs in case lawsuits are filed against an employer. Similarly, liability insurance helps cover liability costs in case claims are made against a business organization or an owner of a business organization that is carrying out operations on a commercial level. In case there is damage to the property of an employee of an organization, this insurance will help pay for any medical expenses that his/her employee may require because of an accident at work.
Every state requires some form of minimum coverage. Some states require more than liability insurance. For instance, in New York, it is mandatory for all motor vehicle owners to purchase personal injury protection or PIP. PIP covers medical expenses and other losses that are suffered as a result of being involved in an automobile accident in New York. Other states require property damage liability insurance to be purchased. This coverage is designed to cover losses associated with vandalism or property damage to physical property owned by the insured.
Professional liability insurance can also be purchased by professionals. This insurance protects professionals from claims that occur because of mistakes or negligence on the part of a professional. In many states, professionals who own or work for firms must carry this type of insurance. The policy covers errors, omissions and negligence by the employees, contractors or subcontractors of the professional. For instance, a contractor who accidentally sprays paint without cleaning it thoroughly enough could be sued if a client suffers injury as a result.