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Written by Aaron Adam
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What Is Liability Insurance?In short, liability insurance is a type of insurance that protects you from liability of a claim filed against you. If you are involved in any type of accident and have this type of insurance, and a judge finds that you are legally liable for that accident's occurrence, your insurance company will pay for damages and costs associated with this situation. Insurance like this is vital in most areas since it will protect you from large-scale financial loss if you do not have any legal protection. In most States, auto liability insurance is required by law because it provides other drivers with financial protection from accidents you cause.
What Does It Cover? Liability insurance provides protection in a number of ways. Each policy is different, which is why it is very important for you to look at several policies to get the best protection possible. In most cases, liability insurance claims for the following are covered.
- Full cost of damages: damages to another's property, including vehicles is covered. Any claim that is made that is caused by a direct result of your fault will be covered.
- Hospital and medical payments: Coverage of another person's hospital and medical care is covered if those costs are because of the accident you've caused
- Rehabilitative care: If the injured person or people need to receive any type of rehabilitation following the accident, the insurance company will cover the costs
- Lost income: If the injured person or people miss work or are otherwise unable to collect their regular income, the insurance company you have liability coverage through will cover the costs.
- Pain and suffering: These costs are also covered, though there may be some limits and the amount is often defined by the court, not the other individual injured.
As you can imagine, each of these claims can be highly expensive. Without any type of liability coverage, you may find yourself unable to make payments. The law sees this as a problem and that is why most states require that you have some type of liability coverage to have a license and to operate a motor vehicle within the state.Without liability coverage, the costs of each of these expenses would be yours to pay directly, out of pocket. Your health insurance will not cover the costs of someone else. More so, you may be sued by the injured party for property or other possessions if you do not pay for the costs upfront.
Limitations of Coverage It is essential to know what your limited liability coverage provides coverage from. Most liability policies will have a maximum amount they will pay out. If the court and judge approves an amount that is higher than the covered amount, you may have to pay this out of pocket. The good news is that most insurance companies have very powerful attorneys who will work to minimize any and all payments that must be made by them on your behalf. Therefore, most insurance companies will work to have the amounts claimed lowered whenever possible.
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