The Importance Of General Liability Insurance
Liability insurance means what it implies. It is coverage when a person and/or business is legally liable for some action or activity. It also provides coverage when liability may or may not exist but some third party is asserting a claim. When consumers think about liability insurance, they normally consider it part and parcel of a bigger policy. That can be auto, business, or home insurance. While that is true, there are some big issues to consider when purchasing general liability insurance.
One of the most expensive costs in any liability claim is the defense of the action. Even a claim that has little or no merit can generate a large expense which can ultimately include legal fees. An insurance policy covers all those expenses. An experienced adjustor will handle the claim. He or she will make an informed decision about whether or not to settle the claim. If there is any settlement, the adjustor will use their knowledge and expertise to make a reasonable offer and refuse to accept an unreasonable offer by the claimant.
It is important to note that an insurance company has an absolute right under the policy to settle any claim. That includes a payout WITHOUT admitting liability. Sometimes saving the cost of litigation, which includes attorney fees, is worth a relatively small settlement.
When purchasing liability coverage as part of any policy, a good general rule would be to buy higher limits than you think you need. Any potential liability claim will include medical expenses, lost wages, temporary or permanent disability, pain and suffering, and in the worst case scenario, a wrongful death action.
A person or business faced with a claim is responsible for damages above and beyond the limits of the insurance policy. In a catastrophic claim, the insurance company could just pay the limits of the policy and the pollicyholder would be on their own. This could well lead to bankruptcy or some other undesirable outcome.
The way to avoid this problem is to choose the highest liability limits offered for the particular policy. The additional premium cost will be minor compared to the peace of mind knowing your home, auto, and business is fully covered.
A person with high assets may well want to consider higher limits then those offered by the underlying policy. This means purchasing what is called an umbrella policy. It is essentially a separate general liability policy that only takes effect if the limits of the auto, home, or business policy are reached. This is a rather unusual event so the umbrella policy may not be all that expensive.
The odds of ever having to use the umbrella policy are slight. That does not mean it is not valuable. A person who drives a car for 20 years and never has a liability claim has not wasted his money. It is money well spent. That is why it is called insurance. It eliminates worry especially for a business owner who wants to stay in business. One claim could wipe out a lifetime of work.
Do not overlook the liability portion of any insurance policy. Our agency can explain all the legal ramifications of liability coverage. We can also inform you about policy limits, and the costs involved. It is important to spend the same or more amount of time with liability coverage as with every other aspect of home, auto, and business insurance. Do not hesitate to ask our agency about any matter raised by this article or any other question as you decide which policy is best for your situation.