Whether you own a home, business, car, boat, recreational vehicle, or simply work with people, there is a constant risk of being held liable for damages. Should your actions, or inaction with regard to property, possessions, or things you do or say cause damage or harm to another individual’s person or personal items or property, you could be held liable by them.
Liability insurance is a form of general insurance that protects the policyholder against financial claims against him or her in the event that another individual sues them.
This insurance is designed to protect an individual or entity from third party claims or lawsuits. This includes a person who sues you for damages, or sues your insurance provider for damages.
What Liability Insurance Provides
Three basic functions:
First, it provides a ‘duty to defend’ the policyholder. That means that if you are sued, the insurance provider will help defend the case against the claim. When you have a liability insurance policy, you personally will not be sued unless the claim is higher than the policy payout.
Second, liability insurance provides the ‘duty to indemnify’ the claim.
Third, they provide the ‘duty to settle’ the claim in a reasonable and clear manner if deemed necessary or possible.
Tendering the Defense
When you have a liability claim filed against you, your insurance provider will take over the defense of the claim, provided the action falls within the scope of the insurance policy. In other words, the insurance company will meet all defense expenses and will also make the final decisions about whether to settle the claim or pursue a court ruling.
When an insurance provider ‘indemnifies’ the claim, it means that they will pay all settlements or court decisions for which the insured is being held liable, up to the limits of the policy itself.
Why is Liability Insurance Important?
Unfortunately, we live in a litigious society. Accidents, mistakes, slander, sleight, and many other factors leave us open to the possibility of being sued. If you are not protected, all of your personal assets and withholdings can be subject to loss during a lawsuit.
Protect yourself, your family, and your future assets by choosing the right level of liability insurance for your needs. Contact a professional at James Campbell Insurance Brokers to learn more about liability insurance.