Liability insurance

From ArticleWorld

Liability insurance is what the policyholder is legally obligated to pay because of negligence, bodily injury or property damage caused to another person. Thus if the insured is involved in a car accident the policy pays for injuries to the other party and damages to the other vehicle resulting from the accident that the insured caused. It also pays if the accident was caused by someone else covered by the same policy, including a driver operating the insured’s car with their permission. The policy also protects the insured homeowner should the contractor damage their property or injure someone on their property including neighboring properties.

In many countries the governments offer mandatory public liability insurance to those people who are in a job that are more at risk for causing accidents or injuries to third parties. Thus, drivers plying public transport, manufacturers of hazardous products who have employees who are at risk – are all required by law to be covered by this policy.

Types of Liability insurance

Such policies are generally three pronged:

1. People working in hazardous conditions, or with materials that may cause injury or accident to third parties, are required to be covered with this policy
2. Manufacturers of certain products which may be considered potentially dangerous or carry the risk of causing accidents or may be defective and faulty need to be covered by liability insurance program though in most states this is not required by law.
3. Employers who expose their work force to environments that may be the cause of the employees getting such dangerous diseases as cancer or black lungs (as the coal miners are apt to get) are required by in many countries to get a liability insurance cover. In those countries where such a condition is not necessary or required by law a number of small firms face bankruptcy even if one such claim is made and they have to face the situation without insurance cover.