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What Does Liability Insurance Cover?

What Does Liability Insurance Cover?

You may know liability insurance as the most common, and arguably the most helpful, type of auto insurance. Where motor vehicles are concerned, liability insurance minimizes your chances of falling into a financial burden when you cause an accident. But what does liability insurance cover for a business?

Due to their uncertain environment of occurrence, liabilities can be partially foreseeable and partially unexpected. It all lies in your preparation. 😬 In this article, we’ll cover areas commonly covered by a liability insurance policy. You will also get to know the exceptions of normal liability insurance. 🤓

What Is Liability Insurance?

First, let’s define the term “liability insurance.” Liability insurance describes a type of insurance that gives the insured party protection against damage or injury caused to other people or property. Most liability insurance policies cover payouts and legal costs that an insured party is supposed to pay if they’re legally found to have caused the damage or injury. 😨

A typical liability insurance policy has the following main exclusions:

  • Intentional damage
  • Contractual liabilities

One unique aspect to note concerning the liability insurance policy is that it only awards payments to third parties. This means you can’t get a payout, but the party you allegedly injured can. 

Now that you’ve known what liability insurance means, let’s look at what it covers. 😁

What Does Liability Insurance Cover?

Currently, to help protect you or your business from liability claims, there are different types of insurance with different types of coverage. These are grouped into either 1) business liability insurance coverage or 2) personal liability insurance coverage. 

Business Liability Insurance Coverage

Standard liability insurance coverages to most businesses include the following:

  • General liability insurance 

This type of liability insurance helps cover claims of property damage or bodily injuries caused by your business. This insurance policy covers the affected individual or group. 🤵 

  • Data breach insurance 

This liability insurance policy deals with data theft. It’s vital in helping you respond to a breach in personal information. This insurance coverage has another name too: cyber liability insurance

  • Professional liability insurance

This insurance policy covers your legal costs if a client sues your enterprise for either omissions or errors based on your professional services. 🤔 

  • Commercial umbrella insurance

This liability insurance helps cover the extra costs based on your standard liability policy limits. 

  • Commercial auto insurance

As the name suggests, this liability insurance policy protects you and your staff as you drive. 🚐 Also, it can cover another person’s bodily injuries or property damage if you are the one responsible for the accident.

Personal Liability Insurance Coverage

These are not likely to be important for you unless you own a physical business (such as offices your client’s visits). Common personal liability insurances include the following:

  • Personal liability insurance

This policy offers protection if someone hurts themselves while on your business premises. It can also be applicable if you’re blamed for damaging someone’s property.

  • Bodily injury liability insurance

This insurance coverage caters to medical bills incurred from a car accident. It only kicks in if you allegedly caused the crash.

  • Umbrella insurance 

As the name suggests, this insurance policy serves to extend the limits of your liability insurance. Auto and homeowner’s liability insurance policies fall into this category.

  • Property damage liability insurance

This insurance policy protects you from repairs needed due to damage from an accident that you allegedly caused.

Now that you know what a liability insurance policy covers, the next step is to understand how it works. 💪

How Does Liability Insurance Work?

A normal liability insurance policy works by protecting you or your business from losses. A liability insurance policy works when:

  • A loss happens during your policy coverage period
  • You launch an insurance claim with the company you took the insurance from
  • The insurance policy covers this type of loss

Before adopting any insurance policy, it’s always a good rule of thumb to check how it works 👍. That way, any holes in your policy won’t blindside you. 

What If Normal Liability Insurance Doesn’t Cover the Issue?

Liability insurance primarily seeks to protect third parties that your business has allegedly harmed financially, physically, or otherwise. This insurance policy doesn’t include coverage for the policyholder. 😱  

For added protection, the policyholder can subscribe to premium insurance policies that incur extra costs. This point is elaborated in the following ways.

  • A normal body injury 🦿 liability policy won’t cover your medical bills if you’re injured in a car accident that you were held responsible for. Instead, you’ll need personal injury protection (PIP) insurance to cover your bills. 
  • Property damage liability insurance won’t be applicable if you need to repair your car following damage that happened due to an error on your part. 😬 To address this type of claim, you’ll need collision coverage.
  • Also, general liability insurance won’t help your business if an employee experiences an injury on the job. If you own a business with onsite employees, a premium insurance policy can cover such costs including worker’s compensation insuranceCommercial property insurance can form a good alternative.

Conclusion

A liability insurance policy is the best type of insurance for you as a business owner. It lessens the burden if someone makes an insurance claim after a snafu involving your business. Do not hesitate to seek a liability insurance quote that best suits you here. 🤑

Also, you should remember to review your liability insurance cover regularly. You need to your policy’s limitations and exclusions ✍.  A lawyer can help you find the liability insurance that gives your business the best protection and the most bang for your buck. Contact us 📞 today for an expert perspective!