What Is Liability Insurance? Benefits, Types And Eligibility
Liability insurance covers any property damage or third-party injury. Here’s all you need to know about liability insurance.
Liability insurance is a type of insurance that offers defence against lawsuits brought by victims of injuries and property damage to others. Liability insurance policies pay for any legal costs and settlements that an insured party is responsible for in the event that they are found legally liable. In most cases, contractual duties or willful injuries are not covered by liability insurance. And unlike other types of insurance, liability insurance policies pay out benefits to third parties rather than policyholders.
Benefits Of Liability Insurance
Listed below are some of the benefits of liability insurance:
1. Offers financial protection to businesses and people
2. Covers legal responsibilities to other parties
3. Protects against property damage
4. Coverage for third-party bodily harm and individual injuries
5. Liability insurance is often required for those that manufacture products, offer vehicle insurance policies or practice law or medicine.
Different Types Of Liability Insurance
There are different types of liability insurance in India and are as follows:
1. Product liability insurance
Businesses that produce goods for the general market must carry product liability insurance. Product liability insurance shields businesses from litigation brought about by injuries or fatalities brought on by their products.
2. Director and officer liability coverage
In the event that the company is sued, director and officer liability insurance protects the board of directors and officers against liabilities. Even though businesses typically offer their employees some level of personal safety, some businesses offer additional protection to their management team.
3. Employer’s liability insurance
Employers are required to have workers' compensation and employer's liability insurance to protect themselves from legal obligations resulting from employee accidents or fatalities.
4. Indemnity insurance
A company is protected by indemnity insurance from negligence claims stemming from monetary loss brought on by errors or failures to perform.
5. Commercial liability insurance
A typical commercial general liability policy, commonly referred to as full general liability insurance, covers commercial liability. It offers insurance coverage for lawsuits resulting from harm to workers and the general public, property damage caused by an employee, as well as injuries sustained as a result of employees' negligence. Infringement of intellectual property, slander, libel, contractual obligation, tenant liability, and employment practises liability may also be covered by the policy.
6. Umbrella liability policy
Personal liability insurance products called umbrella policies are made to guard against catastrophic losses. When the liability limits of other insurance are reached, coverage often begins.
7. Comprehensive general liability policy
Any small or large firm, partnership or joint venture, corporation or association, organisation, or even recently acquired business can benefit from comprehensive general liability plans that are specifically designed for their needs. The following types of insurance are covered under this: responsibility for operations and premises, physical injury, property damage, personal and advertising injury, and medical payments. Punitive damages are not covered by insurance for general and compensatory damages in cases.
Who Can Buy Liability Insurance?
The coverage is intended for businesses or people that face legal repercussions due to accidents or other problems. Hospitals, physicians, business owners, and other similar entities are most suited for this kind of insurance.
General insurance policies frequently include coverage for liability insurance. The Public Liability Act of 1991 establishes the legal requirements for liability insurance in India.