Definition of Liability Insurance: The simplest definition of 'liability insurance' is the Insurance coverage to safeguard against claims alleging that one's negligence or inappropriate action led to bodily injury or property damage.
People & organizations can and do mistakes that they become liable if and when these acts ruled to be the cause for damaging the bodies or the properties of others. That is when insurance policies come to provide the protection. Liability coverage pays once the insured is legally responsible for the negligent act. In some situations, the coverage provides protection if the insured becomes 'morally obligated' to a party that is damaged by the non-negligent acts of the insured.
People/ organizations vary widely in their social and business conduct, therefore does the coverage that is needed to protect them. For each category of people/ organizations you can find different coverages offering the protections. Different people/ organizations need different types/ levels of liability coverage.
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Personal vs Commercial Liability: Personal liability insurance provides coverage for folks while commercial liability provides coverage for a small business entity. A 4-door sedan car needs personal auto liability policy. If exactly the same vehicle is used for delivery, then it may need a commercial auto policy.
Personal Liability Protection normally comes in personal policies such as for example Personal Auto Policies (PAPs), Homeowners PLANS, boat policies, and Personal Umbrellas. These coverages purchase damages that the Insured causes to the bodily injuries, personal injuries, property damages, legal defense in connection with claims brought contrary to the Insured.
Business/ Commercial Liability Protection: Involves cover businesses and/or individuals regarding the their business conducts.
Premises Liability applies when someone apart from the insured or insured's employees sues the business enterprise for damages due to an injury sustained running a business premises. This means that the injured party must first suffer a personal injury on your premises, and must claim for the damages they suffered.
Product Liability includes liability protection for business completed products or services. Similar coverage is provided beneath the term 'completed operations' such as for example operations of many contractors when they cause damages to others in the course of their service rendering. Professional service businesses such as for example physicians, lawyers, real estate brokers, and insurance agents have special professional liability coverages.
Professional Liability. Provides protection for most classes of people and businesses for any bodily injury damages their service/ advice may cause to others. For example malpractice insurance for doctors and medical staff, errors & omissions for insurance & real estate agents, etc.
Employer's Liability provides coverage for employees throughout their employment. The employer has to be at fault or negligent for the coverage to activate. Regarding Workers Compensation, fault and negligence do not have to be proved for employee to collect for any work related injury.
Director's and Officers insurance provides protection against any lawsuits against the officers of the business by its owners. Garage Liability applies in situations where a business handles vehicles owned by others. The coverage provides protection from the risks to be sued due to using vehicles owned by the business enterprise and vehicles which are owned by others (clients.) When a business/ individual works together with or takes possession of other people's vehicles, a special coverage called "Garage Keeper Liability" is needed. Garage Keeper Liability provides comprehensive and collision coverage on vehicles NOT owned by the business while the vehicles now take over the business enterprise. Auto service stations, valet parking businesses, towing services, and car washes are examples of businesses that require garage liability and garage keeper liability protection. Garage keeper liability could be written on Direct Basis or Excess. In the even of Direct Basis, the policy can pay for damages of vehicles of the customers of the Insured irrespective of who is responsible. Regarding Excess, the policy can pay for damages of vehicles of the clients of the Insured only when the Insured is negligent.
Liquor Liability provides protection for establishments that sell liquor (Packaged liquor, taverns, manufacturers of liquor) against loss or damages claimed due to a patron of the business enterprise becoming intoxicated and injuring themselves or others.
Inland Marine/ Cargo Liability provides protection for business involved in hauling merchandise and properties of others. It pays for damages of the properties hauled in case the Insured is likely for the damages.
Time Factors of Liability Insurance Polices
Some commercial liability plans are written on Claim Made Basis. Because of this the policy in effect at that time a claim contrary to the insured will pay for losses, no matter when they occurred before. Most professional liability policies are written on Claim Made basis. Most commercial liability policies are written on Occurrence Basis, where even though the policy could have expired, provided the policy was in force at the time that the bodily injury or property damage occurred, a claim can still be made against it.
Liability Limits
CSL or Combined Single Limit policies allow insurance companies to mix both bodily injury liability and property damage liability insurance under an individual limit. The insurance provider would pay up to the stated limit on an authorized claim whether or not the claim was for bodily or property damage. In Split Limit policies, the policy would break down limits to, for instance, bodily injury limit per person and bodily injury limit per accident and property damage per accident.
Example, a car policy with CSL $300,000 will pay around that limit for just about any and all claims if they are bodily injury for just one person, many people, or property damage that was caused by the Insured. If the policy limits come separated (100/300/50) this means that the insurer will pay the maximum of $100,000 for bodily injury of just one 1 person, $300,000 for bodily injuries of all other folks hurt, and no more than %50,000 for property damage caused by the insured negligent act.