Liability insurance
Liability insurance is used in order to protect yourself if someone else is injured when on your personal property or because of your actions. If not insured, you could be held responsible and sued for everything you own, including your home, possessions, investments, and cash value. Simply put, this could break you. However, if you had liability insurance you would be covered in such a situation, and your out-of-pocket costs would be dramatically reduced.
Benefits of liability insurance:
- Reduces risk of being held accountable for occasional accidents.
- Coverage for bodily injury. Protects you and your assets if you cause harm to someone else, or someone else is injured while on your property.
- Coverage for property damage. Protects you if you cause harm to someone else’s property or possessions.
- Personal protection if legal actions are falsely taken against you.
Tips when considering liability insurance:
- Don’t assume you are already covered. Although some homeowners or renters insurance policies include liability, most do not. Take the necessary steps to find out, and if not, get covered.
- Weigh your risks. If you feel you are at a higher risk of being held liable, you should consider more liability insurance. For example, if you own a business, with constant traffic around your office, or with heavy equipment, an increased insurance plan would be for you, because your risk runs higher than most. “self-funding”, which entails putting money away in case of an accident. However, this is not recommended.
- Evaluate both types of liability insurance. “Claims made” stipulates that all claims against you must have happened and be reported during the life of the policy. “Occurrence” keeps you covered no matter when the claims against you are filed. This is your safest bet in most cases.
- Confirm locations that are covered. For example, a homeowner does not want their coverage to be strictly limited to their home, but have coverage for places like local supermarkets, post offices, parks, etc.