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 liability insurance: Words 568

Understanding Your Liability Insurance

You probably drive a car, own or rent a home, and you may provide professional services ranging from financial to medical. Too few people realize that each of these situations calls for liability insurance. Liability insurance covers the insured against monetary damages due to negligence. In the case of business insurance, the coverage extends to agents and employees. Although it is part of most policies today, that doesn't mean your coverage is the best for your situation.

Terms to Understand

First, here are some essential terms to understand about liability insurance:

• Negligence: Failure to exercise due care, with the result of harm to another person that may result in injury, death, or financial loss.
• Liability: In liability insurance, the responsibility to pay damages resulting from negligence by the insured or his or her representatives.
• Deductible: On a claim, the amount paid by the insured before the insurer's payments begin.

Typical Policies

Each insurance policy has some liability coverage, but how much? Here is a quick discussion of the most common types.

Automobile

•  If a person, automobile, or other property is damaged while you are driving, your automobile insurance covers the claim. The policy provides liability protects against financial loss from liability for "bodily injury" and "property damage" to third parties.
• Roughly half of the states require auto liability insurance in the US. Coverage is not less than $10,000 for injury to one person, and $50,000 for property damage.
• No-fault insurance is required in many states as a replacement of liability insurance to cover medical expenses regardless of negligence.

Business and Professional

Liability insurance is for businesses or individuals who manufacture goods or provide professional services. We like liability insurance that is part of a larger package of insurance that covers the entire business operation.

• For manufacturers, Product Liability is the insurance that protects from financial liability for injury or death from a product.
• For service providers, "errors and admissions" coverage protects against financial liability for mistakes.
• Medical Malpractice is a particular kind of liability insurance specifically targeted to medical practitioners. See also the Medical Malpractice article on this site.

Homeowner's Insurance

Homeowner's insurance covers the owner of the home from liability for injury due to negligent maintenance. We have seen basic limits of $100,000 for bodily image and property damage combined. For medical payments, we have seen limits of $1,000. In both cases, we were offered higher amounts added for additional charges. See also the Property Insurance and Mortgage Insurance articles on this site.

Tenant's Insurance

Like homeowner's insurance, tenant insurance, commonly called "renters insurance," provides property and liability insurance should any of your guests be injured on the premises. See also the Renters Insurance article on this site.

Evaluating Your Needs

Are you a business owner or service provider? Your liability insurance should be part of your larger business insurance strategy. As an individual, your liability insurance should be part of your homeowners or tenant's insurance policy. Your automobile insurance will cover you on the road.

Next Steps

Now that you understand liability insurance, review your policies with your insurance professional to determine whether they still make sense. Ask about ways to reduce your premium with the same or greater coverage. Finally, explore the other links and resources on this site for all four types of liability insurance discussed here: auto, business, homeowner, and tenant.

Web: www.netveyance.com/elance
e-Mail: elance@netveyance.com
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