Liability Insurance – an Introduction

What is Liability Insurance?

There are many different types of insurance policies and Liability Insurance is one of them. If you are deemed to be legally liable for an accident of some kind you can be sued for cost of damages including: property damage; hospital and medical payments; rehabilitative care; lost income; and the pain and suffering of injured person or persons. Liability insurance protects you from these costs if this situation ever arises.

In most countries it is compulsory to have liability insurance if you are at risk of being sued for example: drivers of vehicles, anyone who offers professional services to the public, those who manufacture products that may be harmful, and those who offer employment.

There are different types of Liability Insurance

There are a few different types of liability insurance; here is a brief overview of some of them:

General Liability - protects a company from third party claims - This protects a business from losses caused by negligent acts resulting in bodily injury, property damage on the premises of the business, injury from the result of using a product manufactured or distributed by the business, or a general injury while in operation of the business.

D & O liability stands for "directors and officers” liability – This kind of insurance helps protect acts or omissions of those who are in a directors or officer’s position. This means that the entire company should not be held responsible for the actions taken by the director or officer in charge, and so insurance is held for that person to help protect them.

Employer liability – This form of insurance is mandatory which all business must have. It is designed to help the employee and protect the employer. It is used for when an employee may sue the employer in case of injury, job related illness, or other damages.

Professional liability is similar to malpractice insurance – The purpose of professional liability insurance is to protect those seen as experts or a professional in a given field. When a person is seen as a professional in a particular field they are held to a higher standard and so is considered to hold greater liability towards their clients thus meaning they need more coverage than generally liability insurance.