Liability insurance, which is also often referred to as third-party insurance, is designed to protect people found liable for accidents that cause others to suffer injuries and/or sustain property damage.
If you want to know how important it is to have liability insurance, consider this: Almost all U.S. states legally require vehicle owners to secure liability insurance coverage for their cars, trucks, and SUVs. People can’t register their vehicles without it. New Hampshire and Virginia are the only two states that don’t mandate liability insurance, and that shouldn’t come as any surprise when you consider that neither state legally requires auto insurance in general.
It isn’t only vehicle owners who can benefit from liability insurance, either. Business owners and anyone who practices law or medicine should also look into locking down liability insurance coverage. So, what is liability insurance, how does it work, and what makes it so important to those in many circumstances? Find out below.
What Is Liability Insurance?
Liability insurance is an insurance coverage option designed to protect individuals, businesses, and other entities against claims made by others following accidents that cause injuries and/or property damage. If you were involved in an accident and an investigation concludes you were the responsible party in it, the plaintiff in your case might file a lawsuit against you, the defendant, and seek damages to cover the cost of medical bills, repairs to property, and more.
As long as you have liability insurance, it should cover everything from any damages that a plaintiff might be awarded by a judge or jury to any legal costs you might face while working to defend yourself in court. There are, however, liability insurance limits in many instances. There is a chance that this insurance coverage might not cover all the costs you may endure during a personal injury lawsuit.
Liability insurance can also not be used to cover the costs associated with any intentional or criminal acts committed by the defendant in a personal injury lawsuit. Even if a judge or jury finds a defendant legally responsible for an accident, they can’t rely on liability insurance for coverage in this case. Additionally, liability insurance can’t be used to cover the costs of your own injuries and/or property damage if you were at fault.
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How Does Liability Insurance Work?
Liability insurance can make life easier for those involved in accidents since it can help them avoid shouldering all the blame for them. It can also prevent them from having to cover the costs that come along with them. This is how a liability insurance plan works:
- A vehicle owner, business owner, etc., picks out the right liability insurance based on their specific situation.
- A third party files a claim against a person’s liability insurance company if they ever cause an accident that leads to injuries and/or property damage.
- An insurance company investigates an accident to determine who was at fault for it.
- An insurance company attempts to reach a settlement with a third party if it feels as though a policyholder is liable for an accident.
- An insurance company serves as the defendant in court during a personal injury lawsuit and covers legal costs as well as any damages awarded to the plaintiff in a case.
The policyholder for liability insurance coverage shouldn’t have to do much during a personal injury lawsuit, aside from answering all of the insurer’s questions and providing as much information about the claim as they can. Unless damages and legal fees exceed their limits, an insurance provider should pay for any expenses they face.
However, the policyholder may need to pay a deductible. This is the amount a policyholder will need to pay out of pocket before their insurance kicks in to cover the rest. It can be anywhere from a few hundred to a few thousand dollars depending on the terms of the policy. Typically, a lower deductible equals higher monthly premiums, and vice versa.
What Are the Different Types of Liability Insurance?
Many Americans know all about personal liability insurance since it’s included in the majority of the auto and homeowners insurance policies people purchase. There are many other types of this insurance, though, including:
- Employer’s liability insurance
- Product liability insurance
- Director and officer liability insurance
- Comprehensive general liability insurance
Business owners, in particular, should explore their liability insurance options and decide which ones can set them up with the protection they need against personal injury lawsuits. No one expects to ever be at the center of a liability claim, but having the proper insurance coverage in place provides peace of mind on the off chance that this occurs.
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Why Is Liability Insurance Important?
The average car accident case involving injuries can cost anywhere from $26,000 to $162,000 depending on the severity of the injuries sustained. The average workers’ compensation case can cost upwards of $42,000. Liability insurance can provide individuals and businesses with the protection they need against having to pay these kinds of costs in personal injury cases.
Policyholders just need to make sure they invest in liability insurance policies from trusted insurance providers. Otherwise, they might find their insurance providers won’t always deliver the coverage they need in the aftermath of accidents.
A bad faith insurance lawyer can lend a hand if your insurance company leaves you high and dry after someone files a claim following an accident. Turn to the Accident Hotline for help if you ever find yourself in this position.
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Gain Assistance Navigating Liability Insurance and Bad Faith Claims
Accident Hotline is a wonderful resource for anyone who isn’t sure how to find a bad faith insurance attorney. You can begin working with one right away if your liability insurance company ever gives you a hard time when a claim is filed against you. An attorney can also help you file a claim against a party’s liability insurance after an accident to seek compensation.
Do you have questions about liability insurance or need assistance? Contact us at (888) 340-7454 today to arrange a free consultation.
For a free consultation, call 888-340-7454