Introduction
Liability insurance is one of the classes of insurance plan. This is because of the enormous risks of damage to third parties we face on daily basis. Although, these damages are things we do not always anticipate, however, they happen from time to time with limitless financial implications. These financial burdens may range from replacing the damaged item or property to footing the medical bills. And can sometimes lead to our financial shutdown. It is in the bit to protect yourself and business finances that necessitates this liability insurance.
Meaning of Liability Insurance
Liability insurance is a class of insurance policy that provides coverage for the policyholder damages he causes to third parties or innocents passersby against accidental loss, perils, injuries etc to their person or properties. These perils worthy of insurance cover can depend on the insurance company or providers, and may include but not limited to property damage, bodily injury and personal injuries as well as other liabilities the policyholder may want to cover.
What liability insurance cover
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Injury coverage
Liability insurance provides insurance coverage with respect to expenses that arises as a result of injuries that occur in the event of accidents to third parties. In this circumstance, the insurance company will take care of any medical bills/ or other third party liabilities.
Similarly in extreme circumstances where death results, your insurance company will take care of the funeral expenses.
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Damage coverage
Liability insurance equally offers you coverage in the event of damage to your third party or neighbour’s property. Sometimes you may inadvertently damage your neighbour’s property and there will be a need for repairs or replacement. Similarly, the coverage can as well extend to compensate your victims if they are unable to make use of their property during the reconstruction or construction period.
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Product claims protection
Most times, a liability insurance policyholder may personally engage or his employees to install or fix equipments or appliances on properties. And sometimes these installed equipments cause damages and cost liabilities sets in. Liability insurance sets in to provide you protection. And the insurance company pays the indemnity that will be able to cover the liability cost or a substantial part of it depending on the terms of the insurance policy.
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Personal and legal prosecution coverage
This type of liability insurance coverage provides protection in the event of liability against the policyholder-contractor for injuries resulting from malicious prosecution, infringement of copyright, false arrest, malicious prosecution, wrongful eviction, publication of false information. This may also extend to liability arising from violation of people’s right to privacy.
What liability insurance does not cover?
Liability insurance will not offer insurance coverage in the event of Intentional damage to third parties, Vehicles, Damage to projects during construction, Lost or stolen equipment. These categories of damages are as a result of carelessness.
Additional add-on coverage in liability insurance
There are several other additional coverage that provide protection against perils that are not covered under the major or general liability insurance. However, these optional add-ons coverage and its terms highly depend on different insurance company in question and the demands of the prospective policyholder. Below are some of the coverage add-ons.
Business income protection
This type provides coverage in the event of loss of income of third parties arising from your damage to them.
Employment liability coverage
Sometimes, your employees drag you to court for whatever actionable reason. For example, discrimination, wrongful termination of employment, harassment, etc. This legal action may result to some legal liability against you. In these circumstances, the liability plan coverage will step into provide indemnity. This is because the legal fees can most times be high.
Marine hazard coverage
This class of add-on offers coverage for shipping of products and materials and the damages that result from so doing to third parties.
Benefits of Liability Insurance
There are lots of benefits for buying this type of insurance policy and some of them includes;
- To obey a legal requirement: In some countries, buying this class of insurance policy is a mandatory requirement of law. In these places, it is compulsory that you must have the policy.
- Client satisfaction. Sometimes, Clients insist that you buy liability policy before they will be able to do business with you. In this sense, this class operates to satisfy a client’s need. This coverage assures the client that the business will be fully executed not minding whatever challenge that may arise in the future. This is because the insurance provider will step in to provide coverage or indemnity.
- Provision of protection against damage to property or injuries to employees and third parties
- It equally provides protection against legal liability arising from law suits against the policyholder by employees or even third parties.
- It provides Peace of mind.
What is the cost of contractor liability insurance?
There are some factors that determine the cost of liability insurance and some of them include;
The level of coverage and nature of risks the policyholder is exposed to: the level or extent of insurance coverage is one the major determinants of the cost liability insurance. For instance, the amount a policyholder pays for two coverage items will definitely be different from that for five coverage items. Similarly, the amount of risks the policyholder is exposed to will largely determines the cost of premiums. And lastly, the insurance company in question and the claims history of the policyholder
