What is Liability Insurance?
Liability insurance protects you against claims arising from Bodily Injury or Property Damage you may have caused to others. Your insurance company’s commitment is to defend you if you are sued, and if you are at fault, to pay for the damages according to the terms of the policy. This coverage is not first party medical or life insurance (the policyholder/insured pilot would be a first party), but rather, liability coverage for claims made against you by third parties for which the law holds you legally liable.
Liability insurance covers your liability for bodily injury and property damage occurring to others. Liability insurance does not cover liability that is generally covered under other types of insurance, such as automobile, worker’s compensation, or flood. Liability insurance does not cover losses to a boarder’s property, unless he or she is related to you.
There are many different types of insurance policies available, but liability insurance is one of the most popular because it costs much less than many other options. For example, in regard to auto insurance policies, liability insurance costs far less than full coverage. The reason for this is because full coverage insurance must pay for both your vehicle and any other vehicle involved in a collision, as well as property damage and medical expenses due to injuries to you or another party. On the other hand, liability insurance is only responsible for the other party’s losses. Your person and your property are unprotected, but liability insurance protects you from being held responsible for the other party’s damages. There are different types of liability insurance, including general liability, which works in much the same way as auto liability insurance, but covers businesses. General liability protects a company from third party claims. Aside from general liability, there is also D &
If you are judged to be legally liable for an accident, you can be sued for the full cost of the damages, including property damage; hospital and medical payments; rehabilitative care; lost income; and even the pain and suffering of injured person(s). Liability insurance helps protect you from the financial impact of these costs. If the total of a given loss exceeds the amount of your liability insurance, however, you may have to pay the rest out of your own pocket. Since liability coverage protects your assets in this way, you can see why you need to consider buying more liability coverage than the minimum required by your state. Note that almost all states require basic liability coverage. The Insurance Information Institute (III) provides a state-by-state listing of minimum limits for auto liability insurance on its website. Remember, your state’s requirement is a minimum— it’s up to you to determine how much insurance you really need. Two types of liability insurance are offered: •
