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Introduction Liability insurance is an essential component of managing the risk of legal claims in today’s world. Liability coverage provides financial protection against potential losses resulting from lawsuits filed against individuals or organizations. This essay will explore some basic fundamentals of liability insurance and will discuss the importance of being able to better protect ourselves and our business through a better understanding of this type of insurance policy. Knowing the basics of liability insurance is crucial for the individual as well as the commercial business to be able to reduce risk financial risk and protect each party. Definition and Types of Liability Insurance Liability insurance is defined as a contract between the insured and the insurer where in the insurer agrees to indemnify the insured against lawsuits claims that are filed by third parties against them. In other words it is an insurance policy that protects an individual or a business from the risk of being sued and from the risk of incurring a huge financial loss. General liability, professional liability, product liability and employer’s liability is all part of liability insurance. A general liability insurance policy normally provides coverage for bodily injury, personal injury and property damage claims that is made up against a policy holder. Professional liability insurance is also known as malpractice insurance and provides coverage for professionals like doctors, lawyers and accountants in general against claims that have arisen from neglect or errors that occurred while operating their profession. Employer’s liability insurance is also known as workers’ compensation and basically covers claims that are made by employees that are hurt or that fall ill due to conditions that are related to their work place. Individual Importance of Liability Insurance When it comes to individuals liability insurance has the ability to financially protect an individual’s personal assets and finance. Accidents happen and many times accidents cause injuries, if it is found that an individual is held responsible by the courts for causing harm or damaging someone’s property then liability insurance provides the protection of finances. In some cases an individual can be held responsible for paying for someone else’s medical bills or maybe even the costs that are related to various legal fees. Some forms of liability insurance provide protection for litigations costs that come up as a result of claims that are made against you like libel, slander or defamation. Business Importance of Liability Insurance Since businesses have a wide range of potential liability risks, liability insurance is an essential way for the business to protect themselves from lawsuits and from a large financial loss associated with such events. Liability insurance provides a wide spectrum of businesses with protection by paying for all financial losses that may be a result of litigation like injury or damage to property that is a result of a product that was sold or are sent as samples as well as claims such as malpractice or a actions that are related to negligence that can affect professional advice or services that are related to a business. One such example to think about is a small business that might be driven into the ground by having only one lawsuit filed against them if the owners are not adequately insured. For example, one of the ideas that cannot be overlooked about liability insurance is having it is a good sign of trust that may be required by potential business partners or customers or maybe even vendors that you may be working with currently. Liability Insurance, Factors that are Important to Know when the Insurance is Chosen Some other factors that should always be considered are the deductibles, coverage limits and also any exclusions that may present themselves. The potential types of risks that may be faced and the type of situation that the individual or the business involved are in will affect what type of policy should be taken out. There are many instances where someone might incorrectly assume what the policy reason is due to terms associated with a coverage that they thought would be there only to find that the exclusions that were listed clearly prevent those type of conditions from being applicable. Conclusion In the end liability insurance can be considered to be a most worthy form of insurance, this type of coverage provides the financial support piece of mind that is oftentimes required if a accident ever does happen. It is just one form insurance that a person will need to consider purchasing, however it is possibly one of the most important they will ever hold.
