What is liability insurance? Everything you need to know.

What does liability insurance cover?

In today’s litigious society, liability insurance is more essential than ever. This type of insurance can protect you from lawsuits resulting from:

Any bodily injuries that occur on your premises to customers, employees, vendors, or visitors;

Injuries sustained as a result of the actions or negligence of one of your employees;

Property damage caused by your employees.

 

What types of liability insurance are there?

There are typically four types of liability insurance. 

General liability insurance

General liability insurance is the most common form. In many instances it is part of a larger insurance package, and provides coverage for the above-mentioned occurrences. Some liability coverage will also include libel, slander, and/or infringement on intellectual property. Read the fine print very carefully to determine what is and is not covered in such a policy.

Professional liability insurance

A second type of liability coverage is called professional liability insurance, which is essential in the service industry. This type of coverage protects professionals from personal claims against them for errors made while they’re performing their services. Examples of such insurance include malpractice insurance carried by doctors, or errors and omissions insurance carried by financial advisors, attorneys, accountants, building contractors, and other professionals.

Product liability insurance

The third type of coverage, which you should strongly consider if you own a manufacturing business, is product liability insurance. This coverage protects you if an item manufactured or developed by your company is responsible for an accident, injury, or death. From toy manufacturers to car manufacturers, there can be a significant risk of injury from the produced product. Naturally, the type of product being manufactured would indicate how much coverage you’d need to purchase. Safety measures in place and precautions taken are factored in when determining your premium.

 

Business liability insurance

And finally, the fourth and newest type of liability coverage insures a business against the actions of the employer. The increase in lawsuits filed for wrongful termination, sexual harassment, and/or discrimination has fueled the need for employment practices liability insurance (EPLI). This type of insurance protects you as the employer against such claims made by employees, former employees, or business associates.

 

Choosing the right policy

When buying liability insurance, you can purchase either an “occurrence policy” or a “claims-made policy.” 

Occurrence policy

An occurrence policy can cover claims made months or even years after the incident has occurred.

The insurance company is obligated to review, and if warranted, pay for any claims made resulting from an incident that took place during the coverage period, even if the claim is reported at a later date.

Claims-made policy

The more commonly used “claims-made policy” provides protection only while the policy is in force and claims are made during that time frame. Prior-act coverage may also be included, indicating that acts occurring within a specific time period (prior-act coverage period) will also be covered. Claims-made premiums are generally lower than occurrence policies.

 

Many umbrella or “business” liability insurance packages offered will cover your basic insurance needs. However, it’s strongly advised that you read the fine print carefully, to make sure there are no gaps where you specifically need coverage.

 

If you need a peace of mind for your business, contact Netins Insurance Brokers – a trustworthy advisor and a legal representative to the insurance companies. We will negotiate better conditions and save you time and money. Contact us on 0700 359 07 or office@netinsbrokers.com.