Everything You Need to Know About Liability Insurance
When you're in constant contact with people, customers, clients, or their property, you need to be careful – you never know what can happen. Accidents occur all the time, and very often, you can't influence the sequence of events. So, if you want to avoid risks and save money, consider liability insurance.
Liability coverage is included in small business, auto, and homeowners insurance policies, and it can be a life-saver when it comes to the accidents for which you’re claimed responsible. This article will lead you through essential liability insurance concepts showing you why it is important to own the policy.
What is Liability Insurance Coverage?Let's start with defining the term of liability insurance – it is a coverage policy that includes protection against potential third-party insurance claims. For instance, if you accidentally drop your client's phone, and it crashes, it will cover the expenses of replacing it or repairing it. Otherwise, you'll need to pay the money out of your pocket, which is in most cases, more expensive option. Another example of liability insurance includes the court expenses in case of lawsuits – if another person decides to sue you, your insurance carrier is obliged to defend you and to cover the legal costs, unless the policy states otherwise. There are various types of liability insurance, and each of them includes more or less the same coverages – let’s see the basic ones.
What Does Liability Insurance Cover?Generally speaking, liability policy is used for covering claims against you made by client, contractor, or a member of the public for damaging their property. However, the insurance agency won’t pay the money directly to you, but it will cover the costs for medical treatment, repairment or replacement of the damaged item or the legal costs regarding your defense. It’s also important to know that liability insurance doesn’t cover the personal injury of the business owner or homeowner. Knowing that you must be aware of the importance of the liability insurance – you never know what can happen during the meeting with your partners or during the chat with your neighbor on your doorstep. Even though you haven't had bad intentions, you'll need to pay the indemnity for other person's loss – and you're safe if you own a liability insurance coverage!
Types of Liability CoverageAs you may assume, there are various types of liability coverage policies which are used for different purposes – business, car, or home. This article will go through each of them, emphasizing their basic coverages and crucial details. Let’s start with the first one.
1. General Liability Insurance – Business’ Best FriendIf you're running a business, especially the one which includes everyday communication and meeting with clients, customers, or partners, general liability insurance policy is what you need. This coverage is also called commercial liability insurance. Look the example below: You're in the middle of the important meeting with your partners when your employee accidentally splits the water right on your partner's laptop, which stops working. The partner looks pretty upset, and he/she requires you to pay for the device replacement. In case you’re not insured with liability coverage, you’ll need to pay the total price out of your pocket. That expense might not look too significant at first, but if the accidents continue, they can lead to bankruptcy, which is definitely not a good start for business. So, consider general liability coverage if: • Your location is open to the public – if someone gets injured when slips on the wet floor (and you haven't put the proper sign of warning) of your facility, you're claimed responsible, and you'll need to repay for the medical expenses. • You sell products to customers – if you sell spoiled food to someone, that person can sue you for poisoning or any other inconvenience. If you’re insured, the insurance company pays for your court expenses. • Handle client property – if you’re running computer and laptop repair service, make sure you’ve purchased the general liability insurance policy – if you damage someone’s computer or laptop somehow, the insurance has your back.
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