Liability Insurance, It’s Types and Benefits

Are you leaving in an environment where people experience business losses or car accidents on daily, weekly, or monthly intervals?

Are you a doctor or any medical professional?

Are you scared of damaging other people’s properties? Do you practice law?

This article is here to remove your fear and improve your confidence on finance and other life processes, at the end of this article you will understand what liability insurance is all about and its importance in the business sector and the outer life at large.

Insurance is a form of risk reduction whereby an agreement is made by a company to bear the Financial loss a registered individual might face after paying a certain sum of money to that company either at once or at certain intervals.

The individual or the insured will in turn gain financial assistance from that company in cases of perils caused by natural disasters like flood, fire, wind or even illnesses.

Benefits of Liability Insurance

Every type of insurance (e.g. car owner insurance, life insurance, travel insurance, etc) guarantees financial losses. Liability insurance however, is concerned with financially taking responsibilities for the damages you may inflict on another person, hence it’s also called third party insurance.

Its main benefit is to prevent you from spending your money for accidentally spoiling another person’s property or when you injure a third party. Liability insurance prevents you from being drag to court over a damage or harm you committed out of ignorance or by accident.

How It Works

To be guaranteed of damages to third party, you have buy a liability insurance plan from an insurance company offering such service. If you are confused or ignorant of which company to choose, we have carefully selected am updated list of the best companies offering liability insurance.

Our rating is based on their good credit records, competence, larger coverages, sales of cheaper premium rates, and popularity in the business. They are:

  • State farm
  • Hiscox
  • Nationwide
  • The Hartford
  • Travelers
  • Liberty mutual
  • Progressive commercial

Please note that liability insurance does not take responsibilities for damages you intentionally inflict on a third party or by criminal act.

After you choose your desired company, you can now purchase a liability insurance plan that will last for any duration of your choice. But bear it in mind that there are lesser prices for longterm insurance premiums; and you have to know what is covered or not covered for each insurance plan you go for.

If you are a car owner and you want to buy a liability insurance premium so as to protect you from financial loss when you damage another person’s car and you are at fault, then you can buy a premium plan that will last only for months or just a year.

If within that year or month of your subscription no injury or damage is encountered by a third party or his/her properties, your premium will expire and you will have to subscribe again if you want to. There are premiums for long term insurance plans that may last over 35 years before renewal.

Types of Liability Insurance

The types of liability insurance are dependent on the type of work an individual does and the requirements. These two criteria are also used in policies to decide the cost of premium to be paid by the insured and its coverage.

If you are a business man and a car owner too, you need larger premium covers for your car and business than someone who wants to acquire a single liability plan for his car alone.  The most common forms of Liability insurance are Public, Product, Employers and Third-party liability.

Public Liability Insurance

Few countries have made this type of insurance mandatory for their citizens. Perhaps you will have to pay for damaging another person’s property even if you don’t have it insurance plan. So its preferable that you are covered.

People who acquire public liability insurance are commercial drivers and those working in big factories where tendency to damage or harm a third party is very high. It is called “public insurance” because most of such service requiring coverage are situated in open places like clubs, shopping centres, and markets where their properties are prone to high risk of damage.

If the products of a third party (a customer or business partner) is stolen in the workplace of the insured or policy holder (the owner of the shop who bought a public liability insurance premium), the insurer (i.e. the company will pay back the missing products provided investigations are carried out and the loss is found to be legal or unplanned.

Premiums paid for public liability insurance are solely dependent on the size of the business and the location of such business; the higher the risk involved, the higher the premiums charge. You as a policy holder have the choice to reject such high liability premiums or spend huge amount of money to acquire them.

Product Liability

The word “product” channels this form of liability insurance to manufacturing industrials like pharmaceutical companies. It protects the insured (the company) against harm or damage that may be accidentally occur on the customers (i.e. third party) or injury or harm from products bought from the company by customers.

For instance, if a customer buys drugs from a pharmaceutical company and happens to suffer from any wrong medication, allergy, or expired products. The insurance company that sold liability insurance to the pharmaceutical company will pay for the patient’s medical’ bills till they get well again.

Employers’ Liability

This type of liability insurance is meant for workers who wish to insure the properties of their customers. Or any injury that may occur accidentally at their workplace. Although only few companies offer this type of liability insurance because of fear of their own liability. While some companies offering such insurance acquire reinsurance as a safety measure against their own liability.

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