Liability insurance, also called casualty insurance, pays to defend a company against a lawsuit and/or damages awarded against it. Many liability policies are claims-made, meaning that insureds must report every potential claim to avoid a future loss and lower the premium.
Policy limits vary by state. Many businesses purchase umbrella insurance to cover payments above their general liability policy limits.
Bodily Injury
Bodily injury liability insurance helps pay for expenses related to the other party’s injuries if you are at fault in an accident. This includes hospital fees, emergency care, follow-up visits and medical equipment such as wheelchairs and crutches. It also covers lost wages if the injured person is unable to work due to their injuries and funeral costs if the accident was fatal. It may also help cover legal fees and/or settlement costs if the other party sues you as a result of the crash.
Property damage liability insurance pays for the cost to repair someone else’s vehicle, or other physical property such as a mailbox, fence or home. This is typically included in your policy as part of the bodily injury portion of your coverage, but you can purchase separate property damage coverage through many insurers. It’s important to note that this type of coverage doesn’t compensate you for your own injury-related expenses following a collision, which is why personal injury protection (PIP) and medical payments are available. assurance rc
Property Damage
Property damage liability is one of the two primary coverage types in a car insurance policy, the other being bodily injury. Like the other aspects of a car insurance policy, you can customize your coverage limits by increasing or decreasing your liability limits.
Any damage you cause to other people’s property in an accident is covered by property damage liability. This includes the cost to repair or replace their vehicle, house, fence, lamp post, mailbox, etc. It can also include loss of income if they are unable to run their business due to the property damage.
When a property damage claim is filed against you, your insurance company will pay reparations up to the limit set in your policy. If the damages exceed your limit, you will be held responsible for the remaining amount. That’s why it’s important to always have a minimum of state-required liability insurance.
Liquor Liability
Liquor liability insurance, sometimes known as host liquor liability, provides a safety net of coverage for businesses that serve or furnish alcohol to their patrons. This coverage mitigates the risks of an intoxicated customer causing damages after leaving your business.
This type of coverage is especially important in states with dram shop laws, which hold businesses liable for their over-served patrons’ actions. For example, a drunk party guest may leave your establishment and cause an accident in their vehicle on the way home. The injured party can sue both the establishment and the intoxicated person for damages.
Most businesses that sell, serve or supply alcohol need this coverage. It can be purchased as a standalone policy or as an endorsement to a general liability policy. Some factors that impact the cost of a policy include the location, industry and claims history. Try to minimize your risk by setting a reasonable closing time, controlling serving sizes (i.e., no larger than a 24 oz beer), avoiding drinking contests and long/late happy hours, and promoting accurate measurement of alcohol content in drinks.
Medical Payments
Medical payments coverage, also called MedPay, provides protection for injuries you and your passengers sustain in an accident. This is a separate coverage from personal injury liability (Coverage B) and it doesn’t depend on who was at fault for the accident.
MedPay helps pay for the cost of X-rays, ambulance rides, stitches and follow-up physical therapy sessions—small expenses that often remain after health insurance picks up its portion. It’s a good idea to include this coverage in your policy.
Liability insurance is a great way to protect your assets such as your home, car and retirement savings from lawsuits resulting from accidents on your property. Talk to your insurance agent about how to get the best liability insurance rate for you. It’s worth the peace of mind!