Liability Insurance: Definitions and Terms

Go to this site  of Liability Insurance: The easiest definition of 'liability insurance' is the Insurance coverage to protect 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 so when these acts ruled to be the cause for damaging the bodies or the properties of others. That is when insurance policies arrived at supply the protection. Liability coverage pays once the insured is legally liable for the negligent act. In a few 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, and so does the coverage that's needed to protect them. For every group of people/ organizations there are different coverages offering the protections. Different people/ organizations  need different types/ amounts of liability coverage.

Classification of Liability

Personal vs Commercial Liability: Personal liability insurance provides coverage for folks while commercial liability provides coverage for a business entity. A 4-door sedan car needs personal auto liability policy. If the same vehicle can be used for delivery, then it could require a commercial auto policy.

Personal Liability Protection normally comes in personal policies such as for example Personal Auto Policies (PAPs), Homeowners Insurance Policies, 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 against the Insured.

Business/ Commercial Liability Protection: Involves cover businesses and/or individuals regarding the their business conducts.

Premises Liability applies when someone other than the insured or insured's employees sues the business for damages due to an injury sustained running a business premises. Which means that the injured party must first suffer an injury on your premises, and must make a 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 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 many classes of people and businesses for just about any bodily injury damages their service/ advice may cause to others. Examples include malpractice insurance for doctors and medical staff, errors & omissions for insurance & realtors, etc.

Employer's Liability provides coverage for employees during their employment. The employer needs to be at fault or negligent for the coverage to activate. In the case of Workers Compensation, fault and negligence don't need to be proved for employee to collect for just about 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 in which a business deals with 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 that are owned by others (clients.) In the event that a business/ individual works with or takes possession of other people's vehicles, a particular coverage called "Garage Keeper Liability" is necessary. Garage Keeper Liability provides comprehensive and collision coverage on vehicles NOT owned by the business while the vehicles are in possession of the business enterprise. Auto service stations, valet parking businesses, towing services, and car washes are types 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 no matter who is responsible. Regarding Excess, the policy will pay for damages of vehicles of the customers of the Insured only if the Insured is negligent.

Liquor Liability provides protection for establishments that sell liquor (Packaged liquor, taverns, manufacturers of liquor) against loss or damages claimed because of a patron of the business becoming intoxicated and injuring themselves or others.

Inland Marine/ Cargo Liability provides protection for business involved with 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. Therefore the policy in force at the time a claim against the insured will pay for losses, regardless of when they occurred before. Most professional liability policies are written on Claim Made basis. Most commercial liability policies are written on Occurrence Basis, where despite the fact that the policy may have expired, provided the policy was in effect at that time that the bodily injury or property damage occurred, a claim can be made against it.

Liability Limits

CSL or Combined Single Limit policies allow insurance firms to mix both bodily injury liability and property damage liability insurance under an individual limit. The insurance provider would pay around the stated limit on a third party claim whether or not the claim was for bodily or property damage. In Split Limit policies, the policy would breakdown limits to, for example, bodily injury limit per person and bodily injury limit per accident and property damage per accident.

Example, an auto policy with CSL $300,000 can pay up to that limit for any and all claims whether they are bodily injury for just one person, lots of 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 utmost of $100,000 for bodily injury of 1 1 person, $300,000 for bodily injuries of all other people hurt, and no more than %50,000 for property damage caused by the insured negligent act.