Liability insurance is one of the most important policies a person or business can purchase. It provides financial protection in the event the policy owner is found to be at fault for injuries suffered by a person(s) or damage caused to property. Accidents can happen at any time and being caught without liability insurance can be both financially devastating and illegal.
- Liability insurance is insurance against legal liability to pay compensation and court costs where the insured has been found negligent in respect to injuries sustained by another person or damage to his property. Liability insurance policies are sold individually or can be packaged with other policies such as workers compensation and property insurance. It can also be supplemented with smaller policies that protect a business from a fire, flood or vandalism, to name a few.
- Having liability insurance gives the insured the peace of mind knowing that she is covered if a lawsuit is brought against her. The insurer will be held liable to pay for damages and other costs that arise from a settlement or trial. However, the insurance company will conduct an investigation to rule out any frivolous or unjust claims brought upon the insured. The policy will cover legal fees and court costs that the insured would incur during the litigation process.
- There are several factors to consider by the applicant and the insurance company when it comes to liability insurance. Applicants need to know and purchase the average coverage amount in their industry to adequately cover lawsuits that may be brought against them. Another factor is the premium cost, as it will reflect the coverage amount. The higher the coverage, the more expensive the cost will be to have the policy. The insurance company assesses risk, the coverage amount applied for and other factors such as the company's industry and the history of claims involved with the industry. Once the insurance company offers a premium price, it will be the applicant's responsibility to maintain coverage by paying it on time.
- Although the term "damage" in liability insurance may conjure thoughts related to physical property, it is not the only part of a person's life that may be damaged from negligent acts of others. Financial advisers, consultants, accountants and lawyers can get sued for wrong or misleading information that causes damage to a client financially or legally. The industries that are subject to this type of liability lawsuit are those that offer services, opinions, recommendations or solutions.
- It is recommended that a liability insurance policy be evaluated every couple of years to make sure that the coverage of risks and amounts are up to date. Your situation may have changed since the last time it was viewed, and it needs to be reflected in the policy. In today's society, where millions can be awarded to the offended parties and legal fees to fight the claim costing thousands, being caught with insufficient or no coverage at all can lead to you or your business filing for bankruptcy. In addition, it also may be required by law to carry liability insurance in the area that you conduct business in.
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