All About Liability Insurance

What is Liability Insurance?

Liability insurance is a policy that offers protection to businesses and individuals from risk that they may be held legally or sued for negligence, malpractice or injury. This insurance policy protects the insured from legal payouts and costs for which the policyholder is deemed to be responsible. However, contractual liabilities and intentional damage are usually not covered as part of this policy. This policy was originally created by companies or individuals who experienced common risks and hence created a fund to help pay for each other’s issues regarding this.

?

Why is Liability Insurance important?

This policy was originally created by companies or individuals who experienced common risks and hence created a fund to help pay for each other’s issues regarding this. This especially the case for hospitals, doctors or even business owners.

An example would be, if a product manufacturer sells products that have been faulty or causes damage to other’s products, and then he/she may be sued for the damages caused. Procuring liability insurance will cover the manufacturer from ensuing legal costs.

?

Types of Liability Insurance Plan:

• Product liability insurance?is for businesses that manufacture products for sale on the general?market. Product liability insurance protects against lawsuits arising from injury or death caused by their products.

?

• Employer’s liability and?workers' compensation?is mandatory coverage for employers which protects the business against liabilities arising from injuries or the death of an employee.

?

• Product Liability This is again not a compulsory insurance requirement in many countries, but it is highly important. This is procured by companies whose products are widely used such as chemicals, tobacco, medical products, food, recreational products and others.

?

?

• Third-Party Liability-This policy covers damages caused by the?insured to another. The insured is considered as the first party, the insurance company is the second and the third is the injured or the person/company making the claims.????????

?

• Director and officer liability coverage?covers a company's?board of directors?or officers against liability if the company should be sued. Some companies provide additional protection to their executive team even though?corporations?generally provide some degree of personal protection to their employees.

?

v Fast Fact-

The global liability insurance market size was valued at more than $25 billion in 2021, and is expected to reach $433 billion by 2031.

?