We must have heard about many different kinds of insurance and liability insurance is one of them. But, what is liability insurance? Well, this is an insurance policy that protects a business and the business owner from any risk that can lead to claims. They can be sued and held lawfully responsible for injury, malpractice or negligence. Liability insurance will make sure that they are covered for any legal costs and legal payouts if found rightfully accountable. Contractual liabilities and intentional damage is not covered under these kinds of policies.
Liability insurance is very essential for those who may be held legally responsible for any kind of injuries of others. This insurance is especially important for business owners and medical practitioners. Business owners can make use of this insurance to cover the business as well as their employees from the risks of any liabilities imposed. The insurance is especially designed to offer precise protection against third party insurance claims. The payment gets made to the sufferer, bearing the losses and not the insured. In case of a claim, the insurance carrier has every right to defend the insured. The defense costs often tend to soar in case the cases go on a trial.
The Liability insurers have some major duties and that is to defend the insured, to indemnify and clear the claims. In case the insured is sued, the liability insurer rises to perform its duty to defend its liability insurer and an immediate defense is demanded. The insurer has three options at this point and that is to defend, pursue a declaratory judgment and it may also refuse to defend or to look for a declaratory judgment. The choice to do nothing can be very risky as these can lead to major disputes and bad reputation.
In case he decides to defend, it must do so under a reservation of rights. The insurer carries every right to withdraw from defending if the claim is not covered and can recover from the insured any funds spent to date. The decision to defend must be undertaken with great caution and under a reservation of rights.
One will come across different types of liability insurance, such as general liability, that is very similar to auto liability insurance but takes care of businesses. The purpose of general liability offers protection to a company from third party claims. Then there is employer liability, D & O liability, professional liability insurance, etc.