The Basics Of Liability Insurance

What Is Liability Insurance

Liability insurance is an important decision that needs to be taken into account on a personal basis. If you purchase it, it will cover the cost of damages and injuries that you cause to others if you cause an accident. It is important to recognize that it does not cover the costs of your injuries and property damage, only the cost for others that you harmed. If you have a lot of assets, it is smart to get higher levels of liability insurance to protect yourself in case of a lawsuit. Generally, the yearly cost of liability insurance is not too high. According to one study, you can expect to pay around $750 a year to be covered, but it does change depending on the type of liability insurance you get.

How It Works

There are a variety of coverage plans that you can purchase, and they are generally expressed with three numbers. For example, you could see $15,000/$30,000/$20,000 or 15/30/20. The first two numbers show how much the insurance company will pay for bodily injury. The first is the per person maximum that they will pay, and the second is the per accident maximum. Using the above example, the company would pay up to $15,000 per person to cover their injuries, but only up to a $30,000 maximum for all of the involved people. The final number is how much they will pay for property damage. So, for any single accident, the company would cover up to $50,000 of damages that you caused to other people and their property. 

Benefits of Liability Insurance

The biggest benefit of general liability insurance is protection against the unexpected. You never plan for accidents to happen, especially expensive ones. Having liability insurance allows you to have the peace of mind that comes with knowing that you are protected if you cause something bad to happen.

If you own a business, general liability insurance protects you against injury claims. You will not have to worry about an accident causing a follow-up lawsuit. The injuries that the accident caused will be paid for. It can also help you to close larger contracts. The customers that own the contracts that you will be bidding for will want to know that they will not be out money if you make a mistake. By having insurance, they can be sure that they will not be spending more than you promised they would, and they can be confident in your work.