Let’s divide these two words and understand them separately. First, understand what liability is? It means any obligation or any act which legally binds you. And makes you responsible for and answerable to that act. Secondly, what insurance is? It basically acts as an umbrella on you to protect you and your family from financial losses. Liability may sound negative to you as it feels like a burden. Because it comes with legal responsibility. On the other hand, if you see the other side of the coin. Then, liability Insurance is there to protect you from any financial loss. When the first word (liability) gives you panic then another word (insurance) is giving you medicine for that panic. And the combination of these two words gives immense satisfaction of protection.
Now, let’s go in detail about Liability insurance
What is Liability Insurance?
Liability insurance gives you assurance in protecting from any law dispute or any claim which arises from the liability that you are responsible for. In other words, your company is insured, and in future when your liabilities like debts/financial obligations, malpractices, etc. Which turns into legal dispute or claim then Liability insurance plays its vital role. It gives coverage of compensation that you have to pay to cover those claims or losses. Many companies are providing this policy these days, like, Geico, Chubb, and AIG, etc
What are the Types of Liability Insurance
#1: Indemnity insurance
It is a type of liability insurance that covers errors and omissions of professional’s services, individuals, company’s advisors, etc. In short who provide services to the clients. For instance when the client claims any damages or files a lawsuit against any services then indemnity insurance helps to compensate such claims and protect the professionals or individuals.
#2: Commercial liability insurance
It is a type of liability insurance that gives coverage on events like property is damaged by any employee. Or any injury to employees or a third party. Even injury or any negligent action is done by any employee, etc. Such events lead to lawsuits, and here your policy will look after such matters and give compensation.
#3: Product liability insurance
It is a type of liability insurance that provides coverage to businesses whose products or services have caused damage or injured the public. Such damage leads to law conflicts. And to compensate for the claims for such conflicts, this type of policy is used. It gives protection to your business and helps your business in running smoothly.
#4: Director and officer liability insurance
It is a type of liability insurance in which your company gives coverage to your directors and officers. This is required and important because in case if they are sued by your company’s employees, suppliers, competitors, regulators, customers, shareholders, other stakeholders.
#6 Employer’s Liability insurance
It is a type of mandatory liability insurance which companies purchase for their employees and workers for their safety purpose. This protects you against any responsibility of damage caused to your employees or the death of an employee. For example, an employee gets injured while on the job. Then you are liable to pay a considerable amount for it. This policy protects you in such a situation.
#5 Umbrella liability insurance
It is a type of liability insurance which in other words is extra liability insurance. This not only covers the policyholders but also protects the family and household. It protects the policyholders from injury too. It also covers heads like malicious prosecution, wrongful entry, invasion of privacy, and other hazards.
Here are Some Benefits of Liability insurance
This is a truth known to everyone. That for the immense growth and protection of your business you need the full coverage of liability insurance. Now to know about it more let’s go in-depth and read the benefits of it.
#1 Pay your legal defense
We can’t deny the fact that we live in a litigious society. So, without insurance your business can go in huge loss. In the business, you will face lawsuits or liability claims, accidents, a broken contract, fraud employee, etc. You cannot avoid such situations. You have to fight these events. But this will leave you with huge costs of legal dues. Here a policy will bring peace in your mind. As it can handle all your legal defenses.
#2 Increases credibility
To check the credibility in the market, customers and clients will always check whether your company has insured with liability insurance before dealing with you. This makes them feel safe. As when anything goes wrong and the damage is done. Then the company has someone to pay compensation to customers and clients.
#3 Coverage to employees and workers
Apart from family at home you also have another family outside your home i.e. employees and workers to take care of. They are valuable assets of your company. To protect them from any accident or any other event, liability insurance gives them that coverage. Protecting your employees also comes in the interest of protecting your company. We mean against law disputes and liability claims.
#4 Saves medical expenses
If any person for any reason causes an accident in your insured premises which you own or rent. Then insurance will pay all the medical bills and other expenses.
#5 You won’t lose your best employees
People who are hunting for the best jobs will always get attracted by perks being given by the company. For example, If your company apart from a handsome salary gives packages that include life, health, disability, and long-term care insurance. Then such welcoming packages will definitely attract efficient employees. Thich will eventually give benefit to your company.
A very famous quote says,
“Don’t sell the insurance, sell what insurance can do”.
Let’s explain the quote in brief. No matter what type of business you have, you can never predict the future. Like, natural disasters, accidents in the job, negligence in your premises, law disputes, etc. are next to impossible to predict. If you have a policy, you only need to focus on what is possible and is in your hands. Which is to insure the losses that occur due to such reasons and its best to opt for liability insurance.
This kind of insurance enables you to concentrate on what truly matters. That is, to be productive and profitable for your company. A well-organized company with proper business insurance can do wonders in the market. Because liability insurance is there to protect a third party, company, and your employees. This insurance acts as a shield for your company against the threat of money loss, credibility loss, employee loss, etc.
Always keep this thing in mind that before starting any business be mentally prepare for any loss or damage. Because you cannot stop this and also cannot wait for the storm to pass. To save money of your company from all the losses, insure it with a full proof guarantee.
We hope you liked the information we presented on liability insurance. And if you have any doubts about the topic, please feel free to ask them through the comments section.