What is Liability Insurance
Liability insurance is the type of general insurance availed by companies to protect themselves from unforeseen risks related to the probability of being sued by public, in case of any damage caused due to any project of the company. It covers risks involving legal matters related to launch of any product or service.
This insurance is availed to cover defense costs involved if the company or its employees are caught up in legal intricacies. Some safety issues like destruction of hardware /software, damage to furniture are also covered in this insurance. The extent of cover allowed is proportionate to the size and type of business.
Liability insurance is of various types. Personal damage, employment practice, tenant’s liability and medical expenses are some of the expenses that are paid by general insurance company on behalf of the insurer. Personal damage includes covering those offenses committed by employee. For example, wrong advertising promoted by advertising department of company leading to consumer’s loss is addresses by this type of liability insurance.
When insurer or employee is caught up in lawsuit and damage is borne by the company on their behalf, then employment practice becomes a liability which can safely be covered by liability insurance. Tenant’s liability case occurs when damage is done to premises of business set-up in the form of fire or theft of furniture etc. The damages caused to premises, rented by insurer, are borne by policy issuer under liability insurance.
In US, anyone who drives a vehicle needs liability insurance. Liability insurance for drivers has two components: Property damage and bodily injury. If the driver covered by liability insurance causes an accident resulting into damage to either life or property of the victim, then this general insurance comes to the rescue and pays all related expenses on behalf of insurer.
Bodily damage expenses include funeral cost, hospitalization charges, medical bills, rehabilitation cost etc. Property damage includes damage to public property or lamp pot or even a pet but up to a certain extent. Coverage limit can be a single amount or split amounts. In split amount policy, maximum caps are allotted to damage occurring in various categories. But in single amount, whole amount or a portion of it, as the case may be, can be borne by the insurance company irrespective of the type of damage done.
Liability insurance covering road accidents are popularly known as trucker’s insurance also. Transport and logistics companies go for this insurance to bear unforeseen expenses in the form of road accidents caused by drivers working for them. Single limit insurance is more beneficial to the insurer as amount is not restricted to various heads.
There is a limit to the amount of expenses that can be paid to the insurer. This limit is decided by state laws. It is worth noting that all vehicles should be separately registered for the insurance as common insurance policy method is not applicable in the case of logistic company.