Understanding Liability Insurance Coverage
Liability insurance coverage is a type of insurance that covers injury and damages to third parties when you're at fault. In other words, liability insurance is the insurance you buy to guard against lawsuits and other financial grievances. In theory, you can buy liability insurance for nearly any purpose or endeavor, but, far and away, the two most common types of liability insurance coverage are business liability insurance and auto insurance liability coverage. Of course, a working definition for liability insurance is only the beginning of understanding and buying coverage that offers legitimate financial protection. Here's what you need to know ahead of talking to an insurance agent about which policy best fits your insurance needs.
Limits to Liability Insurance Coverage
Perhaps the most important thing to realize is that liability insurance doesn't cover everything. First, it doesn't cover intentional negligence or criminal acts, as indeed this type of coverage would have the unfortunate consequence of encouraging criminal acts. Other typical exclusions frequently convince business owners to purchase supplemental insurance, such as dishonest employee insurance, or a more comprehensive insurance policy, such as a business owner's policy (BOP). And, like most forms of insurance, liability insurance coverage is likely to carry various coverage limits. Indeed, determining what this coverage limit needs to be is one of the biggest decisions you'll need to make for liability insurance. It's also one of the biggest factors in determining what your premiums will be. Needless to say, these limits can be all over the place. A chemical manufacturer or metalworking factory might need tens of millions of dollars of coverage, while individuals might try to get away with as little as $30,000 in bodily injury and property damage liability coverage.
Liability Insurance Requirements
Strictly speaking, there are usually few, if any, liability insurance requirements. In many states, construction contractors and other industry-specific professionals may need liability insurance to receive state licensing and/or certification. More often, however, it's up to individual companies to determine their insurance needs and procure policies to match. Many small businesses go without liability insurance altogether, having made the calculation that they simply can't afford it. This strategy is a lot like playing Russian roulette with the very existence of your business, as many new, small businesses need only one sizable lawsuit to reach bankruptcy.
For auto insurance, however, individuals have very clearly defined liability insurance requirements. Your state requires that, as part of your auto insurance policy, you maintain minimum levels of liability insurance for both bodily injury and property damage. Of course, not all states have the same requirements. In California, you must carry a minimum of $15,000 for bodily injury per person, $30,000 for bodily injury per accident, and $5,000 for property damage. In Maine, by contrast, you must carry minimums of $50,000, $100,000, and $25,000, respectively. Remember, too, that liability insurance only covers damages of third parties. To cover bodily injury that you might incur, you need to purchase personal injury protection as part of your auto insurance. Likewise, collision and comprehensive coverage protects against damage done to your own vehicle.
Finding Quotes for Liability Insurance Coverage
It doesn't you do much to understand liability insurance coverage if you can't also find it. And, more than finding coverage, you need to solicit quotes from multiple insurance companies. The fastest, more reliable way to do this is online. Here at NetQuote, all you need to do is fill out a quick online form, and we'll connect you to the insurance companies that best fit your liability insurance needs. And, by reducing overhead costs by shopping online, you can often find better rates. Plus, you can talk to insurance agents, review policy details, and consider specific quotes from the comfort of your own home, no small advantage for customers easily stressed by high-pressure situations.