Liability Insurance: What It Is, How It Works, Major Types
Liability insurance protects individuals and businesses from legal claims and financial losses due to accidents, injuries, or damages they may cause to others. It covers the costs associated with defending against lawsuits, as well as any settlements or awards for which the policyholder is responsible. Pichard Insurance Agency provides liability insurance in Monticello, FL, Tallahassee, Quincy, FL, Havana, FL, Crawfordville and surrounding areas.
How Liability Insurance Works:
When someone is injured or suffers damage due to the policyholder’s actions (or negligence), liability insurance kicks in to cover the expenses. These can include medical bills, repair costs, and legal fees. The insurance provider pays up to the coverage limit, while the policyholder may need to pay any costs beyond that.
For example, if a customer is injured on a business’s property, the liability insurance would cover the legal costs and potential settlement. This allows the insured party to avoid large out-of-pocket expenses that could otherwise be financially devastating.
Major Types of Liability Insurance:
General Liability Insurance: This is the most common form for businesses. It covers bodily injury, property damage, and personal injury caused by business operations. It is essential for businesses that interact with clients or the public.
Professional Liability Insurance: Also known as errors and omissions insurance, this type protects professionals like doctors, lawyers, and consultants from claims of negligence or failure to perform their duties properly.
Product Liability Insurance: This insurance covers manufacturers, distributors, and retailers for damages caused by defective products. If a product causes harm or injury, this policy covers legal costs and damages.
Auto Liability Insurance: Required by law in most places, this insurance covers damages or injuries caused by the policyholder’s vehicle. It typically includes coverage for bodily injury and property damage in case of accidents.
Employer’s Liability Insurance: Often part of workers’ compensation insurance, it protects employers against lawsuits from employees injured or becoming ill due to work-related activities.
Liability insurance helps manage risks, offering essential protection for individuals and businesses in a variety of contexts. Interested in discussing this further? Call or email us anytime.
