Liability insurance is a type of insurance policy that provides protection against claims or lawsuits filed by third parties alleging bodily injury, property damage, or other losses caused by the insured party’s actions or negligence. It covers legal expenses, court costs, and settlements or judgments awarded to the injured party, up to the policy’s limits. Liability insurance is commonly purchased by individuals, businesses, and organizations to protect against the financial risks associated with potential lawsuits and claims. There are various types of liability insurance policies available, including general liability insurance, professional liability insurance, product liability insurance, and public liability insurance, each tailored to address specific risks and liabilities faced by different individuals or entities. Having liability insurance coverage helps provide peace of mind and financial security by transferring the risk of legal liability to the insurance company, thereby protecting the insured party’s assets and interests.
Insurance coverage to protect against claims alleging that one’s negligence or inappropriate action resulted in bodily injury or property damage.
Compensation to third parties who are injured or whose property is damaged due to the fault of the insurance holder. You may have liability insurance for your car or your home, or to cover actions you take in the course of your profession. Liability polices are sometimes called “third-party policies.”
Liability insurance is a form of protection against claims of loss or injury, for which a policy owner might be otherwise responsible.
In other terms, liability insurance indemnifies acts that are legally deemed negligent and may result in various damages. Liability insurance is often a mandatory form of insurance coverage for many professionals. As such, liability insurance extends to medical and legal fields in a form of malpractice insurance. Liability insurance may also apply to manufacturers of consumer goods and is known as product liability. The primary purpose of liability insurance is to safeguard the policyholder from lawsuits and third-party claims. Liability insurance was first introduced in transportation to protect motorists and vehicle owners in cases of car accidents.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March, 2024.
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