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Business Insurance: Liability Insurance and Its Different Types

Posted April 1, 2013 by Andy to Insurance 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

Insurance is one of the most important things for a business. In today’s dynamic world, it is not possible for a business to run smoothly unless it is covered for loss. Insurance in simple words is the transfer of risk from one party to another. When you are insured, the risk factor in your scenario is minimized; however, the burden has to be faced by the insurer.

There are various types of business insurances, all of which are important for one reason or another. However, one type that is considered the most important by many is liability insurance. It is explained below in detail with its various types.

Liability Insurance

Liability insurance is one of the main types of business insurance. It covers different types of legal claims against the business or the insured. There is always the danger of a business having to face some kind of liability for one reason or another.

Several types of insurance include some aspect of liability coverage. For example: a homeowner's insurance policy covers against claims or liability slapped on the homeowner by someone who slips on the property. This is why this type of insurance is preferred even if you do not run a business.

The shield offered by this type of insurance is twofold. It provides a legal defense in case the policy holder has to face a lawsuit. Plus, it also indemnifies the policy holder with respect to the court verdict, which means that the insured has no payment to make.

However, there are some important points that have to be paid attention to. This type of insurance policy does not cover willful acts of negligence or acts that are committed intentionally. In such a scenario, the burden of everything falls on the person and the insurer is not liable to help.

Business liability insurance can be divided in several types. Some of the main types include:

Public Liability: This type of insurance covers an organization or business against claims that are due to an injury caused to the public or their property due to the business operation.

Directors And Officers Liability Insurance: This type of insurance is usually used in a corporation where there are directors and officers. The main aim of this insurance is to cover them from costs linked with lawsuits resulting from errors committed by directors and officers.

Environmental Liability Insurance : protects the insured from physical damage, property injury and cleanup costs caused by the release, dispersal, release or break out of pollutants.

Errors And Omissions Insurance: This type of business insurance is mainly for professionals involved in insurance or real estate businesses such as brokers, agents and third-party administrators. This covers them against errors and omissions made that may cause a lawsuit from the aggrieved party.

Prize Indemnity Insurance: This type of insurance is specially designed to protect the insured from giving away a huge prize at an event. Examples include offering prizes to competitors who can make a hole in one at a golf club.

Professional Liability Insurance: This is one of the most famous types of liability insurance and is also commonly known as professional indemnity insurance. This protects the insured party against potential negligence claims made by their clients. This insurance may be known under a different name depending on the profession, such as medical malpractice insurance in case of the medical profession.

About Andy: The author Andy is a finance expert and works for a multinational company. He emphasizes on having insurance as it is important for businesses to be covered against risk. In his free time, he likes to read more about management and the changing financial scenario. To know more about liability insurance, you can click here.

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