A Guide to Understanding Liability Insurance
Understanding insurance, what kind you need, and how and when to use it is a very frustrating and overwhelming thing. When you don’t work in insurance, it can be challenging to determine the right coverage for you, your family, your car, or your business. Whether you need medical, auto, home, or more comprehensive and specialized types of insurance, it’s important to understand how you are covered. Keep reading if you’d like to find out more about liability insurance and how it can protect you.
What is liability insurance? Liability insurance protects you if you are found to be legally liable for expenses if an accident or injury occurs on your property. However, different insurance policies have different levels and types of coverage, so it’s important to know the limits of your insurance coverage.
You will most often find personal liability insurance coverage included in your home or renters policies, and probably your auto insurance as well. There’s a good chance your baseline policy will not cover significant accidents or damages, so talking with your insurance agent and looking into additional coverage is a good idea.
Let’s talk about the different kinds of liability insurance you may need or want, and how to determine how much the policy will protect you.
Auto Liability Coverage
Car insurance is necessary for any driver to legally operate a vehicle. The main component of auto insurance is liability. It can protect you in two ways.
If you cause an accident that injures another person, the insurance will help pay their medical bills. It will also cover repairs for the other person’s property if you damage it with your car.
Like any insurance policy, there are different levels of coverage. It’s important to talk with your agent to determine how much the insurance will cover in the event of a low-level and high-level accident.
No one wants to be responsible to pay out-of-pocket expenses that they can’t afford. This is especially true when they already have insurance that is supposed to help.
Homeowners Liability Coverage
Though it isn’t necessarily required like car insurance is, homeowners’ and renters’ insurance is extremely important to have. You never know when an accident could occur and you don’t want to be stuck paying an excessive amount of money that insurance could have covered for you.
Homeowners liability coverage provides you financial protection if you are found legally liable for an injury that a guest suffered while in your home or on your property. If you are responsible to pay their medical bills, liability insurance can help cover the cost.
Liability insurance is typically included in a basic homeowners insurance policy – though there are often limits to the coverage, including a maximum amount an insurer will pay towards a claim. To find out your limit, contact your insurance agent.
Renters Liability Coverage
Renters’ liability coverage is very much the same as homeowners’. It will help cover the medical bills of a guest if you are found legally liable for their injuries in your home or apartment. Renters liability insurance will also help you if there are damages to the rental property that you are responsible for.
In the same way as homeowners insurance, renters liability coverage likely will have a maximum amount the insurance provider will cover in a claim. Be sure to talk to your agent to make sure the policy provides enough coverage for you.
Landlord Liability Coverage
Being a property owner comes with many different challenges and responsibilities. If you are found negligent of maintaining the property or advising your tenant of potential risk and they are injured, you will be financially responsible for any medical expenses.
A typical landlord insurance policy will include liability coverage to an extent that will help cover these expenses. It’s important to know the extent of this coverage, especially if the property is older. This is because it could contain more risks than a newer property and cost more to fix.
Business Liability Coverage
Owning a business can put you at certain risks that you may not account for. There are many different types of business liability insurance you should consider. Most commercial general insurance policies will include liability insurance. This will help pay legal expenses and medical bills for which you are responsible.
Some different types of business liability coverages you may want to look into include:
- data breach liability insurance;
- errors and omissions insurance;
- employment practices liability insurance.
Data breaches, employee accidents, property damage, etc. are all things that you should protect yourself against as a small business owner.
Talking to an insurance agent will help you find the right insurance coverage for you and your business. It can also help you determine what types are necessary, what types can be helpful, and what types you don’t need. This way, you will be paying a reasonable amount on an insurance policy that will protect you in the case of an incident.
Personal Umbrella Policy
Most insurance policies will offer some liability protection, but not much. A personal umbrella policy will provide liability coverage beyond the limits of another insurance policy and gives you greater protection in high-cost situations.
Your insurance may cover half of the medical bills after a car accident and you are responsible for the other half. The personal umbrella policy will help cover these additional costs and you won’t be left scrambling to try and pay them. The personal umbrella policy helps you avoid having to pay out-of-pocket expenses that your regular insurance won’t cover.
Is Liability Coverage Enough?
The short answer is probably not. Liability insurance, especially in cars, is often the bare minimum you need to have to protect you in the case of an accident. We never know when something could happen. Because of this, it’s important to talk with an agent about the limits your policy has and how you can protect yourself completely.
There are so many different kinds of insurance policies. Your agent can help you determine which ones would be helpful to you. This will ensure that you have full coverage while staying within your budget.
Rather than researching different policies on your own, go to an insurance agent. Let them do the work for you. There are so many agencies and policies to look at. It can be extremely overwhelming, and you may not even be looking for the right terms. Insurance is often frustrating to work with. Take some of the stress away by hiring someone else to help.
These days it’s pretty easy to go online and research on your own. However, the number of carriers and types of insurance you have to look at may drive you crazy. If you’re determined to do it on your own, write down everything you think you will need and a budget you’d like to stay under before doing any research. This will help you limit the number of things you look at.
No matter what kind of insurance you’re dealing with, it is often very frustrating. Getting an independent insurance agent to help you out is highly recommended. Make sure you aren’t paying too much for insurance you don’t need and that you are fully covered, just in case.
What Should I Look for In an Insurance Carrier?
If you are determined to research on your own, there are certain things you should look for when deciding on an insurance provider.
- Quality Customer Service: no one enjoys dealing with insurance so knowing that you will receive good customer service when making a claim or asking a question is extremely important. Talking to an actual person when calling is more preferable to a robot or machine. There’s a bonus if they have an actual local office building you can go to.
- Good Reviews: if you research insurance providers online, definitely check the reviews. Everyone will have a bad review here and there. However, if they are mostly good, you should be able to trust the carrier.
- High Ratings: insurance carriers are rated on several different things: quality of offerings, customer service, affordability, financial strength, etc. You can look at a third-party reviewer, like J.D. Power – a trusted source of insurance ratings, to help you decide on the right provider.
- Multiple-Policy Discounts: you will need more than one type of insurance and most companies will have some rewards for insuring your car, home, and life at the same place. Bundling insurance policies will often give you a much better deal while staying affordable. Just be sure you aren’t paying for anything you don’t need.