What is liability insurance and who uses it
Insurance is defined as, “a thing providing protection against a possible eventuality.” Liability insurance provides this protection for individuals and companies against the possible eventuality of having legal charges levied against them and held lawfully responsible for things such as malpractice, injury, negligence or mismanagement.
Certainly, an intentional violation of agreements or contracts and deliberate damages caused by the insured party would not be shielded by the liability insurance. Having said that, this type of insurance policy normally does include legal costs, unless specifically mentioned otherwise, and settlements for the insured, that is, the person or organization covered by a liability insurance policy.
Imperative for many professions, the liability insurance policy is beneficial especially for those who are purposely, by choice, involved in activities that endanger others. Although there is no planned motivation to cause injury or loss, the relative probability of some harm happening, because of their line of work, is high. Medical practitioners, product manufacturers and most types of business entrepreneurs are the biggest beneficiaries of liability insurance policies. This can be clearly explained with examples.
Any manufacturing industry or commercial business could cause physical hurt to people or damage properties belonging to the public, owing to their wide range of business activities. For instance, a restaurant in a mall frequented by many people could have accidents in their kitchen that could cause physical impairment to their own employees or the public. Or, a taxi driven by a company hired driver could injure a pedestrian. In both these cases, a liability insurance would help cover the legal costs involved in defending the insured and if found guilty, for enabling them to pay compensation for the accidental wrong done to a third party.
Liability insurance is of paramount importance as a safety net to meet attorney’s fees and settlement claims. Most health care professionals find this policy useful to protect themselves from liability arising out of bodily injury or mental anguish allegations.
