What is Liability Insurance?
Good question!
Liability insurance is a form of risk management that protects people and businesses from being sued, or being ‘liable’, for damaging someone else’s property, or causing physical harm to another party.
Much like other forms of insurance, we look at liability from two different lenses: personal and commercial.
Let’s start with Personal.
Every habitational policy (which is a fancy word for home, condo, or renters), must be sold with liability included. This means that whoever is listed on the personal policy as an insured is considered protected from claims against bodily injury or property damage. One cool fact about this liability coverage is that it follows you around the globe! I often use the example of a travelling Canadian heading to Ireland, and maybe getting a bit to rowdy at the pub one night. Let’s say this traveler got sued for something that happened – his home insurance back at home can cover him!
Aside from the above example, there are many reasons as to why a homeowner would be considered liable for injury or damage to a third party. Whether your house caught fire and caused the neighbors house to suffer, or your outside stairs were slippery and caused bodily injury – things happen! So, it’s important to understand the tremendous value of personal protection.
Now, let’s chat about the commercial side.
Whenever we look at risk management from a commercial perspective, it’s important to treat the entity as we would a person; therefore, we must ask questions like what is the exposure? And what is the worst-case scenario?
Just like people, businesses are sued for injury and damage to third parties all the time, so liability is very important to have in place. Unlike the personal side, however, the commercial side has more areas of exposure and are classified as being either professional or general.
Professional liability is a protection for individuals within an organization who can become liable for wrongdoing. General liability is focused on the brand, and is considered much more broad or ‘general’ to the company as a whole.
That’s liability in a nutshell! Now go out and get some.