One of the most common and important types of cover, liability insurance comes into play if an incident occurs during which someone else – a third party or an employee, for example – loses money due to factors that are technically your fault, or the fault of your company.
Liability insurance protects you and your business from the risk of a lawsuit. It can pay for legal costs up to the policy limits.
Coverage
Liability insurance provides protection from lawsuits, claims and losses. It can help keep your business from losing money if you’re sued by customers or other third parties over property damage, bodily injury, and other types of damages.
Liability insurance is often required for automobile owners, product manufacturers, and anyone who practices medicine or law. It can also protect your assets if you lose a suit over property damage or bodily injury caused by your actions.
General liability covers the most common risks to your business. It pays for legal costs if you’re found responsible for customer injuries or property damage, and it covers personal and advertising injury such as copyright infringement.
Errors and omissions (E&O) or professional liability insurance is also available for businesses in many fields, such as doctors and lawyers. It can protect your company from a wide range of liabilities, including erroneous investment decisions, failure to provide services, and negligent hiring and firing.
Limits
When you buy a policy, you agree to specific limits that will determine the maximum amount of money your insurance provider will pay in case of a covered loss. Whether you’re looking at auto liability, professional liability or workers’ compensation coverage, limits are crucial to understand.
Often times, an individual policy will include two different limits: a per-occurrence limit and an aggregate limit. A per-occurrence limit establishes the most funds that your policy will provide for a single incident, while an aggregate limit covers the entire policy period.
The right limits for your business will depend on the risks you face and how much money you want to cover if a claim is made. As you grow or your operations create greater exposures for third-party claims, it’s important to increase your limits to ensure you have enough protection in case something goes wrong.
Exclusions
Exclusions provide a clear definition of what is and is not covered under your liability insurance policy. These provisions are a crucial part of the overall coverage package, as they are often the basis for denial of a claim.
For example, many policies exclude bodily injury or property damage claims resulting from subsidence and earth movement, which can include landslides, mudflows, earthquakes, or a variety of other phenomena. This can be a huge problem for contractors who operate in areas where these types of situations are commonplace, such as excavation and underground utility work.
These types of claims can be a major expense for your company, as they can cause extensive damage to your reputation and revenue. Fortunately, there are specific liability insurance policies engineered to protect against these kinds of claims. They are called employment practices liability (EPLI) policies. Ask your agent about them today! They are available to any business, of any size.
Payments
Liability insurance pays out in a variety of ways. It covers bodily injury and property damage claims, including securing bail bonds for accidents or traffic violations that occur while using vehicles covered by the policy.
It also pays out for the cost of a court settlement or award. And it will even reimburse you for prejudgment interest.
One of the best things about liability insurance is that it’s inexpensive. That makes it a perfect complement to your business insurance. It’s a good idea to get a quote from an insurance agent to find out if it is right for you and your company. Then, you can shop around for the most competitive rates. Once you have the coverage, it’s important to take your policy seriously and read it carefully so you can make informed decisions about your protections. Liability Insurance Agency ’s also a good idea to contact your agent at any time with questions about your coverage or how to get the most out of it.
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