View random article

What Is Liability Insurance?

Liability insurance is a type of insurance that is structured to protect the holder in the case of 3rd party lawsuits or claims.

Insurance companies offer many different types of insurance policies. One of these products is a liability insurance, which is one of the most popular types of insurance policies. One reason liability insurance is popular is because it is more affordable compared to other options. Take for example auto insurance. When it comes to this a liability insurance can be much more cost effective compared to a full coverage insurance because in a full coverage insurance, both the vehicle of the insurance holder and the other vehicle involved in the accident. It will also involve dealing with damages to property and the medical expenses of any person injured in the accident.

But then liability insurance only covers the other party and its loss. The insurance holder and his property is not covered by the insurance. The liability insurance basically protects the insurance holder from any kind of responsibility from any damages that is inflicted on another party.

Liability insurance has many different types. For example, general liability basically functions like an auto liability insurance but in this case, it covers business. The general liability insurance protects the insurance holder from any kind of third party claim. Another kind of liability insurance is called an D & O liability. D & O means Directors and Officers, which is an insurance that covers the action of the directors or officers of a company. This is an insurance that protects a company from any of the actions done by its officers.

Other types would include employer liability and also professional liability insurance.

Featured in Finance