The word “liability insurance” refers to an insurance policy that protects an insured party against claims arising from injuries or property damage to others. Liability insurance policies cover any legal bills and payouts that an insured party is accountable for if they are found legally liable. Liability insurance does not cover deliberate harm or contractual duties in general. Unlike other types of insurance where policyholders are paid, Liability insurance pays third parties.
Some noteworthy points:
- Liability insurance protects against claims arising from injuries and property damage to people and/or property
- Liability insurance pays for legal fees and payments if the insured party is proven liable
- Intentional harm, contractual liabilities, and criminal prosecution are among the provisions that are not protected.
- Vehicle insurance plans, product producers, and anybody who performs medicine or law are all required to have liability insurance.
Types of Liability Insurance:
- Public Liability
- Professional Indemnity
- Employer Liability
- Product Liability
- Third-party liability
- Personal liability
- Workers’ compensation
- Commercial liability
Importance of Liability Insurance
Individuals who are legally responsible and at fault for the hurt of others, or who damage the property of others, require liability insurance. As a result, third-party liability insurance is commonly referred to as liability insurance.
Even if the insured party is proven legally accountable, liability insurance does not cover willful or illegal activities. Insurance is a must for anyone who drives a car, practices medicine, or practices law – in a nutshell, anyone who can be sued either for damages or injuries, need an insurance policy. The insured and third parties who may be hurt as a result of the policyholder’s unintentional negligence are both covered by the policy.
Who should buy Liability Insurance?
The policy is intended for businesses or individuals who are held legally responsible for injuries or other problems.
This form of insurance is ideal for:
- Business owners
- Other professionals
For example: if a product manufacturing company sells a product that harms other persons or items, the company may be held liable for any losses or damages incurred as a result of its product. However, if this manufacturing company purchases a liability insurance policy, the insurer will reimburse the loss or litigation costs.
General liability insurance is included in most insurance packages. The Public Liability Act of 1991 defines the scope of liability insurance in India.