Home » What is individual liability insurance and what does it cover?

What is individual liability insurance and what does it cover?

by Uneeb Khan
What is individual liability insurance and what does it cover?

What is individual liability insurance and what does it cover?

Liability insurance is typically a part of the coverage of a homeowners or auto insurance policy. A personal liability umbrella policy may be a possible option for more protection.

Why individual liability insurance?

Legal liability risk is a fact of modern life. It is perhaps the biggest financial risk that people face. Normal incidents, such as a car accident or a neighbor’s child slipping on the kitchen floor, can result in lawsuits, with large damage awards. Without liability insurance, most individuals and families could be facing financial disaster. What Is Liability Insurance Coverage?

Additionally, state laws may require liability insurance. For example, some states have mandatory liability insurance laws, requiring car owners to maintain auto liability insurance as a condition of the license or use on public highways. Other states require car owners to submit financial responsibility after an accident.

Individual Liability Insurance Sources

 Such civil liability may have its source in any part of the person’s life.  Normally [1], policies provide the following liability coverage.

  • Homeowners Insurance [2]: Liability coverage under a homeowners policy is provided in one of three sections:
    • Third-Party Medical Payments: These are medical expenses of injured third parties.
    • Additional coverage: These cover certain expenses incurred by the insured in case of bodily injury or property damage.
  • Auto Insurance: Liability coverage under an auto policy is provided in one of two sections:
    • Medical Payments: These are medical or funeral expenses payable for bodily injuries.
  • Boat Liability Insurance: Liability protection under a boat insurance policy is typically provided in the Protection and Indemnity (P&I) section. P&I includes coverage for the following:
    • Property Damage: Covers damage to or destruction of someone else’s property, including loss of use. Depending on the policy, additional coverage may be available for excess medical expenses, workers’ compensation for longshoremen and longshoremen, Jones Act, and damage to piers and piers.
  •  Liability coverage under CPL is similar to what is provided in a homeowner’s package.

Policy exclusions

Standard policies specifically exclude liability arising from a number of activities or situations. Such exclusions limit the range of perils covered in a standard policy, allowing the insured to provide the most commonly needed protection at a reasonable cost. Typical policy exclusions include the following:

Other: Excludes, among other things, liability for bodily injury or property damage arising from war, communicable disease, sexual abuse or harassment, controlled substances, and workers’ compensation.

Excess Personal Liability Umbrella Policy

The Excess Personal Liability Umbrella policy is designed to provide liability coverage in situations where potential liability exceeds the limits of protection provided by a regular homeowners, auto, or boat policy. Those who have accumulated wealth and individuals who practice certain professions very often face such risks simply because they appear to have the ability to pay. To address such needs, a person may want to consider an excess liability umbrella policy.

The term “umbrella” derives from the fact that such policies require an insured to carry a base amount of liability coverage, very often in the form of specific policies. In the case of a covered loss, reimbursement comes first from the base policies. 

Coverage under an excess umbrella policy has two main goals:

  • Provide larger amounts of protection than are available under other policies.
  • Expand protection, filling coverage gaps that may exist. Liability umbrella policies typically have fewer exclusions than other policies.

Includes the policy

An insurance policy is a written contract between the insured and the insurance company. The protection provided by the policy generally represents a significant part of an individual’s total risk management program. Therefore, it is important that an insured individual read and understand the key provisions of the policy, such as the following:

  • A basic policy may not provide the amount of protection needed.
  • What are the coverage limits? This refers to the maximum dollar amount the insurance company will pay in the event of a covered loss.
  • What are the withholding amounts? Withholding is a dollar amount or percentage that the insured must pay before the insurance company will pay its share of the loss.
  • In the event of a loss, what are the obligations of the insured? 

Seek professional advice

Insurance agents and brokers, insurance advisors, and other trained financial consultants can provide answers to detailed questions about a particular policy. These professionals are also helpful in selecting the right policy and the appropriate amount of coverage.

[one]Return to reference specific coverage and terms of a policy may vary from company to company and from state to state.

[2]Return to preference liability coverage normally provided under a renters or condominium unit owner’s policy is similar to that provided under a homeowners policy.seo

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