Insurance Needs Approach - Liability Insurance

Liability insurance is the portion of an insured's policy for expenses such as the injured persons medical bills, rehabilitative therapy, and lost wages due to the negligence of the at-fault individual. After adding up all of the medical expenses for the injured and the legal fees of the negligent person, the standard liability in one's homeowners or auto policy is often not enough.

Solution:
Liability Insurance. A personal liability umbrella insurance policy can give an individual added liability protection without a large added cost. Additional liability insurance is often inexpensive, especially compared to the added coverage one gains. Furthermore, liability insurance covers one's non-business activities anywhere in the world.

Types

1. Personal property floater: Similar to a scheduled personal endorsement designed to provide "all risks" coverage for unscheduled property on a worldwide basis.

2. Umbrella liability policy: Designed to provide additional liability coverage for catastrophic legal claims and judgments. The umbrella will pay only after the limits of the underlying policy are exhausted (requires the policyowner to carry certain minimum amounts of insurance).

3. Professional liability: Also known as professional errors and omissions (E&O) insurance/Malpractice insurance. The purpose is designed to cover liability arising from the failure to use due care and the degree of skill expected from a person in the profession in which the insured is engaged.

An Introduction to Insurance Policy Selection


Related Articles
  1. Professionals

    Business Insurance

    Business Insurance
  2. Insurance

    Is It Safe To Be Without Umbrella Insurance Today?

    At low cost, you can buy significant extra liability coverage in case you're sued due to an accident or other trouble. See it as bankruptcy protection.
  3. Professionals

    Professional and Director Liability

    Professional and Director Liability
  4. Financial Advisors

    An Advisor's Guide to Prof. Liability Insurance

    A guide to what financial advisors need to know about professional liability insurance.
  5. Home & Auto

    Filling The Gaps In General Liability Insurance

    Standard liability coverage may not be enough. Special needs call for specialized policies.
  6. Professionals

    Umbrella Liability Insurance

    Umbrella Liability Insurance
  7. Taxes

    Do You Need Umbrella Insurance For Household Help?

    Homeowners insurance may not be enough – say, if your nanny sues for damages after an accident. That's where umbrella coverage comes in.
  8. Home & Auto

    Intro To Insurance: Conclusion

    By Cathy ParetoInsurance is an integral part of any personal financial plan. The type of insurance and the amount of coverage you obtain all depends on your unique financial and family circumstances, ...
  9. Home & Auto

    Cover Your Company With Liability Insurance

    Every business is susceptible to legal action. Find out how to protect yours.
  10. Professionals

    Homeowner Endorsements and Auto Insurance

    Homeowner Endorsements and Auto Insurance
RELATED TERMS
  1. Business Liability Insurance

    Insurance that protects a company and/or business owner in the ...
  2. Umbrella Personal Liability Policy

    A type of insurance policy that provides excess coverage above ...
  3. Comprehensive Personal Liability

    Comprehensive personal liability coverage will pay for covered ...
  4. Blanket Contractual Liability Insurance

    Liability insurance that provides coverage for all contracts ...
  5. Aggregate Limit Of Liability

    The most an insurer can be obligated to pay to an insured party ...
  6. Adjusted Liabilities

    The liabilities of an insurance company that differ from the ...
RELATED FAQS
  1. When does it make sense to buy personal liability insurance?

    Protecting yourself from lawsuits is important to the financial well-being of you and your family. Is personal liability ... Read Answer >>
  2. What is the difference between an expense and a liability?

    Learn what liabilities and expenses are, which financial statements they are listed on, and the differences between liabilities ... Read Answer >>
  3. What is the difference between legal liability and public liability?

    Discover the differences between a general legal liability, a specific public liability and a professional indemnity in the ... Read Answer >>
  4. Does renters insurance cover dog bites?

    Learn how a renters insurance policy can provide liability coverage for dog bites and how coverage may vary by state and ... Read Answer >>
  5. How might a company's contingent liabilities affect its share price?

    Discover what contingent liabilities are, and how and to what extent such liabilities may have an impact on a company's share ... Read Answer >>
  6. What are some examples of current liabilities?

    Examine some common examples of current liabilities a company may owe within a year or less in order to accurately assess ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center