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Basics of Liability Insurance

Ever thought how insurance, as a concept, started and gained this current level of demand? In a world of ever-growing businesses, risks become a major part of any person’s life. There is always a level of economic uncertainty and one never knows when they would need any sort of financial help. These risks in everyday life brought the idea of insurance to this current level of popularity. The individuals and companies who faced common level of risk tried to create a fund where they pool in the money to help pay for each other’s problems, establishing the idea of insurance. Insurance acts as a safety blanket to individuals and businesses by providing help if and when they need.

Since insurance is a friendly term in mostly all households, what people hear or talk about often are life insurance or health insurance. However, there exist many other types of insurance policies which are not specific to any one particular need, like health or one’s life. One such example of it is liability insurance.

What is liability insurance?

Liability insurance is a policy which provides protection to individuals and businesses from risk which might occur due to negligence, malpractices or injury to another party, in case of fault on their parts. In other words, liability insurance covers any legal costs of the insured party in case they are legally held accountable or sued for any injury or damage to the outside party.

  • Fun fact-

Unlike other insurances, liability insurance is one type of insurance which pays to the third party and not the policyholder.

Are there exceptions to liability insurance?

Yes, liability insurance does hold exceptions, primarily two.

  • Any cost incurred due damage caused to the third party by the policyholder intentionally will not be covered under this insurance. Covering all kinds of damages caused by any policyholder would take away the incentive for them to work carefully, trying to avoid damage to others at all costs.
  • Any contractual situation, i.e., if a party is in a legally binding contract to bear damage costs to another party, if any, cannot be borne by the insurance policy.

How does liability insurance work?

Usually, a person has to get the insurance of the minimum level mandated by the government of the respective country. Apart from that, an individual is free to go for a higher limit if they want to secure more of their assets in case of an accident in future.

Taking an example of a road accident, suppose, you hurt some person and caused damaged to their car. In case you are the one at fault, you would be the one liable to pay for their medical bills and the repair costs of their car too. Having a good amount of liability insurance would help you cover the maximum cost. In a situation where your insurance cannot cover the total damage done, the injured person can choose to sue you with you having to pay for those expenses out of your pocket, majorly affecting your own assets.

The costs which a liability insurance covers are the expenses occurred due to accidents happening in mere seconds with no possible anticipation but lead to a greater hole in your pocket.

Types of liability insurance

Multiple aspects of our lives pertain some level of risk. There are different kinds of liability insurances framed, particularly to serve the purpose. While there are a lot of kinds of a liability insurance, here, we try to list a few, more popular ones.

  • Product liability

This is a non-mandatory insurance which are mostly issued by the companies whose products are widely consumed like medical products, tobacco, chemicals, food, etc.

 

  • Employer liability

This insurance is used by employers to cover any expenses that might occur in case an employee is injured or harmed in their employment period due to their job. Often, companies do not see it as a major concern but in case of accidents, they suffer financially to meet up the expenses.

 

  • Third-party liability

This type of insurance covers any expenses occurred to a third party because of the first party. Here, the person who buys the insurance is the first party, the insurance company is the second party and the person who got injured, etc and is making the claim for it.

How is the premium amount determined?

As you would know, premium amount is the amount of money an insurance company charges you for the insurance policy you choose to purchase. The premium amount would be determined on the basis of the base rate which is based upon the needs and the assessments conducted by the insurance company. To decide the premium amount, the companies consider the aspects like size of risk involved, claims taken in previous time and the business record of the client.

Major liability insurance firms

Multiple companies provide liability insurance in India, few of which are

  • HDFC Ergo Commercial General Liability is the insurance policy which provides protection against claims of property damage or bodily injury for which the company can be held liable for. It acts as a foundation for most organisations’ liability programs.

This policy also covers potential threats which did not exist years ago, for example, internet. It works to insure internet related libels, invasion of privacy, etc.

 

  • ICICI Lombard provides various liabilities insurance covers to suit business requirements, like, industrial, non-industrial, etc.

It covers the legal costs and expenses incurred with the prior consent of the insurer and within the limit of indemnity and covers situations of death, injury, disease or property damage to any third party.

 

  • Bharti AXA Commercial General Liability Policy offers cover for liabilities which occur as a result of business processes and operations in case of an injury or death of a third party by the insured vehicle.

 

How to claim general liability insurance?

When the unexpected accident happens, here are a few steps you can follow to claim for insurance and protect your financial assets.

  1. Contact your insurance agent or provider

As soon as the accident happens, you should contact your broker, who more often than not, recommend you to reach out to the insurance agent. Make the advance move and do not wait for legal actions to happen. Sending in an advance notice would help to resolve the claim better.

 

  1. Collect all the details and review the policy

Keep your insurance policy handy, in case you need reference. The certificate of liability contains all the necessary details and the provider would need to know the details like name, business name, contact information, type of coverage and description of the claim.

 

  1. Keep detailed records

Make sure that you have detailed evidence of the conversations regarding the claim by having the recorded emails, or noted versions of verbal conversations.

 

  1. Weigh your options correctly

There are usually three courses of action which one needs to follow:

Answer the claim. You either admit to or deny the allegations of the claim and explain why.

 

Try to dismiss the claim. The lawsuit may be frivolous and your lawyer will seek to have it dismissed.

 

Settle the claim. To avoid the expensive litigation process, your insurer may want you to reach a settlement out of court with the client.

Since insurance is a friendly term in mostly all households, what people hear or talk about often are life insurance or health insurance. However, there exist many other types of insurance policies which are not specific to any one particular need, like health or one’s life. One such example of it is liability insurance.

What is liability insurance?

Liability insurance is a policy which provides protection to individuals and businesses from risk which might occur due to negligence, malpractices or injury to another party, in case of fault on their parts. In other words, liability insurance covers any legal costs of the insured party in case they are legally held accountable or sued for any injury or damage to the outside party.

  • Fun fact-

Unlike other insurances, liability insurance is one type of insurance which pays to the third party and not the policyholder.

Are there exceptions to liability insurance?

Yes, liability insurance does hold exceptions, primarily two.

  • Any cost incurred due damage caused to the third party by the policyholder intentionally will not be covered under this insurance. Covering all kinds of damages caused by any policyholder would take away the incentive for them to work carefully, trying to avoid damage to others at all costs.
  • Any contractual situation, i.e., if a party is in a legally binding contract to bear damage costs to another party, if any, cannot be borne by the insurance policy.

How does liability insurance work?

Usually, a person has to get the insurance of the minimum level mandated by the government of the respective country. Apart from that, an individual is free to go for a higher limit if they want to secure more of their assets in case of an accident in future.

Taking an example of a road accident, suppose, you hurt some person and caused damaged to their car. In case you are the one at fault, you would be the one liable to pay for their medical bills and the repair costs of their car too. Having a good amount of liability insurance would help you cover the maximum cost. In a situation where your insurance cannot cover the total damage done, the injured person can choose to sue you with you having to pay for those expenses out of your pocket, majorly affecting your own assets.

The costs which a liability insurance covers are the expenses occurred due to accidents happening in mere seconds with no possible anticipation but lead to a greater hole in your pocket.

Types of liability insurance

Multiple aspects of our lives pertain some level of risk. There are different kinds of liability insurances framed, particularly to serve the purpose. While there are a lot of kinds of a liability insurance, here, we try to list a few, more popular ones.

  • Product liability

This is a non-mandatory insurance which are mostly issued by the companies whose products are widely consumed like medical products, tobacco, chemicals, food, etc.

 

  • Employer liability

This insurance is used by employers to cover any expenses that might occur in case an employee is injured or harmed in their employment period due to their job. Often, companies do not see it as a major concern but in case of accidents, they suffer financially to meet up the expenses.

 

  • Third-party liability

This type of insurance covers any expenses occurred to a third party because of the first party. Here, the person who buys the insurance is the first party, the insurance company is the second party and the person who got injured, etc and is making the claim for it.

How is the premium amount determined?

As you would know, premium amount is the amount of money an insurance company charges you for the insurance policy you choose to purchase. The premium amount would be determined on the basis of the base rate which is based upon the needs and the assessments conducted by the insurance company. To decide the premium amount, the companies consider the aspects like size of risk involved, claims taken in previous time and the business record of the client.

Major liability insurance firms

Multiple companies provide liability insurance in India, few of which are

  • HDFC Ergo Commercial General Liability is the insurance policy which provides protection against claims of property damage or bodily injury for which the company can be held liable for. It acts as a foundation for most organisations’ liability programs.

This policy also covers potential threats which did not exist years ago, for example, internet. It works to insure internet related libels, invasion of privacy, etc.

 

  • ICICI Lombard provides various liabilities insurance covers to suit business requirements, like, industrial, non-industrial, etc.

It covers the legal costs and expenses incurred with the prior consent of the insurer and within the limit of indemnity and covers situations of death, injury, disease or property damage to any third party.

 

  • Bharti AXA Commercial General Liability Policy offers cover for liabilities which occur as a result of business processes and operations in case of an injury or death of a third party by the insured vehicle.

 

How to claim general liability insurance?

When the unexpected accident happens, here are a few steps you can follow to claim for insurance and protect your financial assets.

  1. Contact your insurance agent or provider

As soon as the accident happens, you should contact your broker, who more often than not, recommend you to reach out to the insurance agent. Make the advance move and do not wait for legal actions to happen. Sending in an advance notice would help to resolve the claim better.

 

  1. Collect all the details and review the policy

Keep your insurance policy handy, in case you need reference. The certificate of liability contains all the necessary details and the provider would need to know the details like name, business name, contact information, type of coverage and description of the claim.

 

  1. Keep detailed records

Make sure that you have detailed evidence of the conversations regarding the claim by having the recorded emails, or noted versions of verbal conversations.

 

  1. Weigh your options correctly

There are usually three courses of action which one needs to follow:

Answer the claim. You either admit to or deny the allegations of the claim and explain why.

 

Try to dismiss the claim. The lawsuit may be frivolous and your lawyer will seek to have it dismissed.

 

Settle the claim. To avoid the expensive litigation process, your insurer may want you to reach a settlement out of court with the client.

Since insurance is a friendly term in mostly all households, what people hear or talk about often are life insurance or health insurance. However, there exist many other types of insurance policies which are not specific to any one particular need, like health or one’s life. One such example of it is liability insurance.

What is liability insurance?

Liability insurance is a policy which provides protection to individuals and businesses from risk which might occur due to negligence, malpractices or injury to another party, in case of fault on their parts. In other words, liability insurance covers any legal costs of the insured party in case they are legally held accountable or sued for any injury or damage to the outside party.

  • Fun fact-

Unlike other insurances, liability insurance is one type of insurance which pays to the third party and not the policyholder.

Are there exceptions to liability insurance?

Yes, liability insurance does hold exceptions, primarily two.

  • Any cost incurred due damage caused to the third party by the policyholder intentionally will not be covered under this insurance. Covering all kinds of damages caused by any policyholder would take away the incentive for them to work carefully, trying to avoid damage to others at all costs.
  • Any contractual situation, i.e., if a party is in a legally binding contract to bear damage costs to another party, if any, cannot be borne by the insurance policy.

How does liability insurance work?

Usually, a person has to get the insurance of the minimum level mandated by the government of the respective country. Apart from that, an individual is free to go for a higher limit if they want to secure more of their assets in case of an accident in future.

Taking an example of a road accident, suppose, you hurt some person and caused damaged to their car. In case you are the one at fault, you would be the one liable to pay for their medical bills and the repair costs of their car too. Having a good amount of liability insurance would help you cover the maximum cost. In a situation where your insurance cannot cover the total damage done, the injured person can choose to sue you with you having to pay for those expenses out of your pocket, majorly affecting your own assets.

The costs which a liability insurance covers are the expenses occurred due to accidents happening in mere seconds with no possible anticipation but lead to a greater hole in your pocket.

Types of liability insurance

Multiple aspects of our lives pertain some level of risk. There are different kinds of liability insurances framed, particularly to serve the purpose. While there are a lot of kinds of a liability insurance, here, we try to list a few, more popular ones.

  • Product liability

This is a non-mandatory insurance which are mostly issued by the companies whose products are widely consumed like medical products, tobacco, chemicals, food, etc.

  • Employer liability

This insurance is used by employers to cover any expenses that might occur in case an employee is injured or harmed in their employment period due to their job. Often, companies do not see it as a major concern but in case of accidents, they suffer financially to meet up the expenses.

  • Third-party liability

This type of insurance covers any expenses occurred to a third party because of the first party. Here, the person who buys the insurance is the first party, the insurance company is the second party and the person who got injured, etc and is making the claim for it.

How is the premium amount determined?

As you would know, premium amount is the amount of money an insurance company charges you for the insurance policy you choose to purchase. The premium amount would be determined on the basis of the base rate which is based upon the needs and the assessments conducted by the insurance company. To decide the premium amount, the companies consider the aspects like size of risk involved, claims taken in previous time and the business record of the client.

Major liability insurance firms

Multiple companies provide liability insurance in India, few of which are

  • HDFC Ergo Commercial General Liability is the insurance policy which provides protection against claims of property damage or bodily injury for which the company can be held liable for. It acts as a foundation for most organisations’ liability programs.

This policy also covers potential threats which did not exist years ago, for example, internet. It works to insure internet related libels, invasion of privacy, etc.

  • ICICI Lombard provides various liabilities insurance covers to suit business requirements, like, industrial, non-industrial, etc.

It covers the legal costs and expenses incurred with the prior consent of the insurer and within the limit of indemnity and covers situations of death, injury, disease or property damage to any third party.

  • Bharti AXA Commercial General Liability Policy offers cover for liabilities which occur as a result of business processes and operations in case of an injury or death of a third party by the insured vehicle.

How to claim general liability insurance?

When the unexpected accident happens, here are a few steps you can follow to claim for insurance and protect your financial assets.

  1. Contact your insurance agent or provider

As soon as the accident happens, you should contact your broker, who more often than not, recommend you to reach out to the insurance agent. Make the advance move and do not wait for legal actions to happen. Sending in an advance notice would help to resolve the claim better.

  1. Collect all the details and review the policy

Keep your insurance policy handy, in case you need reference. The certificate of liability contains all the necessary details and the provider would need to know the details like name, business name, contact information, type of coverage and description of the claim.

  1. Keep detailed records

Make sure that you have detailed evidence of the conversations regarding the claim by having the recorded emails, or noted versions of verbal conversations.

  1. Weigh your options correctly

There are usually three courses of action which one needs to follow:

Answer the claim. You either admit to or deny the allegations of the claim and explain why.

Try to dismiss the claim. The lawsuit may be frivolous and your lawyer will seek to have it dismissed.

Settle the claim. To avoid the expensive litigation process, your insurer may want you to reach a settlement out of court with the client.

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