Introduction
Liability insurance for a business is an insurance arrangement that protect businesses and individuals from legal costs incurred against third parties due to their business or personal activities. The main types of liability insurance for a business are general liability, professional liability and product liability. The business owner would be legally liable for third party injury, death or damage to third-party property from his business contact, therefore this insurance policy pays the third party claim.
History
Short-term insurance companies provide liability insurance to businesses to pay for any third-party liability costs that may arise as a result of business activities. Businesses take this policy, which is renewal every insurance year, from an insurance company to protect them from third-party claims and any formal lawsuit. Besides, paying for the actual third-party claim, liability insurance for a business covers all related costs such as litigation and legal costs on behalf of the insured.
Features
General liability covers any public liability expenses against third parties such as death or injury as well as damage to third-party property. Tenants liability extension protects the insured from any legal lawsuit arise against tenants. Public liability cover extent to cover costs associated with wrongful arrest, defamation and legal defense costs. Closely related to general liability are the liabilities that arise against third parties as a result of using your motor vehicle on public roads. These liabilities are third-party property damage, passenger liability, third-party bodily injury or death as well as contingency liability. Businesses use their vehicles on public roads on daily basis and are no exemption to such liabilities.
Professional liability insurance business protect professional against legal costs to third parties as a result of their business contact and practice. Doctors, for example, are prone to third-party claims due to their nature of business, and hence it is mandatory in many countries for doctors to have this policy in place before they practice. If you are a financial adviser (for example), you really need this cover because your clients may lose their money as a result of your investment advice, and thus they would hold you liable.
Liability insurance business includes liability costs to third parties as a result of the products that you sell on the market. Default products cause harm such as death or illness to consumers, and hence you will be held liable. In such case, product liability policy would kick in and settle the third party claim. Also, product liability extend to cover costs that are involved when a product is recalled from the market, food and drink poisoning as well as work away risk.
Tips and comments
If you are in business and want to avoid stretching your budget to include paying un-expected third party claims, a liability insurance business policy is good for you. Liability claims are regarded as long-tail claims meaning that they may not be reported immediately, and the litigation process may take a long period of time. This will affect your business in terms of money to pay for any legal costs and the ultimate claim, company reputation as well as taking your business time while attending to court proceedings. This can be easily managed through taking a liability insurance policy.
