Liability insurance is an insurance product that provides protection to an insured party against claims resulting from injuries or damage to other people or property. It covers legal costs and payouts for which the insured party would be found liable.
Individuals and organizations with liability insurance are protected from being held liable for harm or damage to another person’s or their property. Without it, you could have unlimited liability and the suing party could go after your personal assets.
The government and its agencies interact with the public throughout the country. Naturally, things can happen during their day-to-day operations which result in injury, damage to property, and financial harm. Without some form of protection from the resulting litigation, the function of the government and its agencies will be seriously impacted and therefore liability insurance programs are established to protect in these instances.
How Does Liability Insurance Work?
Because the concept of insurance is the transfer of risks, we see its operation where a company (or individual) has a risk, they pay a premium to the insurance company, the insurance company, in turn, takes on the risk and the company no longer needs to worry about that risk. However, if the company is not insured and some disaster happens, the company is left to suffer huge losses.
Factors to Consider before Buying Liability Insurance
Before buying liability insurance, you should do the following:
- Take a look around or go shopping. There are several insurance providers and a vast range of coverage options available. Check them and be sure to go through their policies.
- Only get the insurance that covers your current quality of living or business. You don’t need insurance for incidents that won’t put your finances in jeopardy.
- Inquire with your insurance company about what the coverage does not cover.
- Consider combining several plans with a single insurance provider.
- Review your insurance requirements at least once a year.
- Take steps to reduce risk and avoid loss.
Types of Liability Insurance
Insurance policies vary depending on the type of risks involved. Some of them are discussed below.
Employer’s Liability Insurance and Workers Comp
Established in 1911 by the State of Wisconsin, this is a type of insurance that provides cash benefits and medical care to workers when they suffer injury or illnesses related to their employment. This protection includes cash benefits to families of workers who lost their lives while being on the job. Workers Comp is especially important for construction projects.
This type of insurance implies that the insurance company will put the insured back into the same position as before the loss or damage occurred.
Director and Officer Liability Insurance
Director and Officer Liability Insurance, also known as management liability, covers personal liability for any errors or mistakes allegedly made against the company’s management team. This also includes legal defense costs and awards made against them (people in supervisory positions including managers).
Umbrella Liability Insurance
Umbrella insurance is a term used to refer to additional liability coverage. You can think about it as an additional layer of security that picks up where the coverage of your other insurance policy ends. It, therefore, implies that umbrella insurance coverage will not come into play until all other applicable policies have been exhausted.
Commercial General Liability
Commercial general liability insurance (CGL) is one of the most significant forms of insurance to consider because it covers the widest range of potential incidents. It is insurance that protects a business in the event of a lawsuit. The policy will protect your business if your business causes injuries or property damage to a third party. It however does not cover injuries to your employees. It applies only to a third party, taking for example, the case of some sustaining injuries while within the premises of your property.
Comprehensive General Liability Insurances
A company insurance policy that covers customer injuries, customer property damage, and litigation connected to both is known as comprehensive general liability insurance. This type has the same meaning as general liability insurance, except for the use of the word “comprehensive,” which has become obsolete.
Commercial Property Insurance
Commercial Property Insurance is designed to protect your building and contents from catastrophic loss. An example is your building burning down. If your property is insured under the commercial property insurance policy, then the insurance company will shoulder the cost of rebuilding your company and in some cases pay you the supposed profit you will have made between the period your building burnt down and when it is fully restored.
Our Policy on Insurance
Purchasing insurance does not have to be a difficult process. Sure, there is a lot to think about, but keep in mind that you do not have to tackle it alone. Get as much consultation as possible before you pay for any of them. Be sure to read about joint and several liability, too.