How Can Liability Insurance Help You?
Published by Sharekhan Education | October 31, 2021
How Can Liability Insurance Help You?
“Liability” in insurance parlance means “being liable for damages caused to others because of your doing or not doing certain things”. This means that the insured is responsible to compensate others for the damages caused by him willfully or out of negligence. If you are legally liable to pay for the damages and that too out of your own pocket then just think of the dampening effect this can have on your resources?
Example
The following example can help you understand this better. Let us say for example your car meets with an accident and damages another person’s car to the tune of Rs.50000/- or maybe a customer slips and falls on your wet floor and breaks her back. Her hospitalization and treatment cost runs in lakhs. In both cases you are most likely liable to compensate the injured for the damages caused. Such or other situations where you are in fault or the injury/damage is not due to your fault you may still be held liable to pay. Compensating a third party for the damages so caused can be taxing to your pockets; this is where liability insurance can come to your rescue.
Use of Liability Insurance:
Liability insurance is a useful risk management tool which offers protection to individuals, professionals, product manufacturers and businesses from legal claims resulting from injuries and damages that they may cause to other people and/or their properties. Being most suited for professionals like doctors, lawyers and other businesses interacting with people in general, these policies typically cover legal costs and charges, the insured may be responsible for. But it is important to note that this insurance does not compensate claims arising due to intentional damage or contractual liabilities.
Types of Liability Insurance:
There are different types of liability covers available like Professional Indemnity, Public Liability Insurance, Product Liability Insurance, Third Party Insurance and Employer Liability Insurance to name a few.
Summary:
To summarize, we can say that liability insurance can protect you or your business against financial losses from legal liabilities arising due to accidents, acts of negligence, etc. To secure your business or profession it is important to have the right risk management strategy in place; so from the various types of liability policies available; select the one which suits your business or profession the best.
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