Liability insurance provides a financial shield in case you’re sued for an accident. For example, if someone slips and falls in your parking lot, liability insurance may help pay for medical bills or property damage.
It’s important to review your policy limits regularly. It’s also wise to consider adding an umbrella policy, which offers higher dollar limits and broader coverage.
Personal injury coverage protects you against claims that your negligent actions caused harm to another person. Generally, this includes bodily injury (BI) claims such as hospital bills and funeral costs and property damage (PD) such as damaged vehicles or buildings. It may also include mental and emotional distress.
A personal injury lawsuit usually alleges that your negligent actions directly resulted in the harm suffered by the plaintiff. This type of claim is not covered by auto insurance, but it might be by a homeowners or renters policy.
Some policies also provide personal injury protection, which pays your legal fees if you are sued over damages that you are legally responsible for. In addition, some policies offer umbrella liability coverage that kicks in when the limits of other insurance are reached. These are generally purchased as separate policies, but they can be included in home, auto and business insurance packages. Other types of liability insurance include product liability, directors and officers liability and workers’ compensation.
Property damage liability coverage pays to repair or replace another person’s car, home or other property if you are found at fault in an accident. This type of insurance is separate from collision coverage, which pays to repair your own car less your deductible. This type of coverage is generally required by law in most states, though the amount of coverage you need and the limits are a matter of personal choice.
For example, if you crash into someone’s garage door and wreck their expensive vehicle, property damage liability would cover the cost of repairs up to your policy limits. However, if your crash caused more than that amount of damage, you might be sued for the excess.
Other types of liability insurance include professional indemnity, directors and officers liability and product liability policies. Professional indemnity insurance covers a business against lawsuits over decisions its employees make on the job, while product liability policies protect manufacturers from claims that their products are defective.
Limits are the maximum amount that your insurance company will pay for a covered claim. Each coverage type has its own set of limits that are usually indicated on a policy by three numbers separated by a forward slash.
For example, if you have $1 million each claim/$3 million aggregate limits on your property and professional liability policies, each lawsuit will be paid up to that limit. However, if the second lawsuit is related to a different incident or occurrence (such as an injury from equipment you failed to maintain in your clinic), the entire $3 million aggregate limit would be available for this claim.
It’s important to choose limits that are high enough to protect your business in the event of a catastrophic loss. Your OMIC account representative can assist you in selecting appropriate limits based on factors such as industry practice among similar professionals, tort reform in your state and your specific professional situation.
Many policies exclude coverage for certain acts or occurrences, such as theft and fraud. You will want to review your policy carefully to make note of these exclusions. In some cases, you can purchase additional insurance or a “rider” to cover these losses. Some policies also have a conduct exclusion, which covers intentionally bad behavior that results in harm to others. In order to get around this, you may want to consider professional liability insurance, which protects against errors or omissions in the performance of professional services.
Generally, accidents that result in property damage are covered by general liability. However, some policies require that the damage must be caused by an occurrence. This requirement helps limit the number of times that a claim can be filed.
Most liability policies exclude coverage for damages resulting from product liability or pollution. These risks can often be covered by separate business auto and property policies. In addition, many policies have an exclusion for abuse and molestation. These allegations can be extremely expensive to defend and may damage a company’s reputation. assurance rc