Liability Insurance

What is 'Liability Insurance'

Any type of insurance policy that protects an individual or business from the risk that they may be sued and held legally liable for something such as malpractice, injury or negligence. Liability insurance policies cover both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies.

BREAKING DOWN 'Liability Insurance'

Liability insurance is very important for those who may be held legally liable for the injuries of others, especially medical practitioners and business owners. A product manufacturer may purchase product liability insurance to cover them if a product is faulty and causes damage to the purchasers or any other third party. Business owners may purchase liability insurance that covers them if an employee is injured during business operations.

RELATED TERMS
  1. Business Liability Insurance

    Insurance that protects a company and/or business owner in the ...
  2. Discovery Bond

    A type of fidelity bond used to protect a business from losses ...
  3. Blanket Contractual Liability Insurance

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

    The most an insurer can be obligated to pay to an insured party ...
  5. Business Legal Expense Insurance

    An insurance policy that provides coverage for expenses that ...
  6. World Insurance

    A commercial liability policy with extended global coverage. ...
Related Articles
  1. Entrepreneurship

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  2. Financial Advisors

    An Advisor's Guide to Prof. Liability Insurance

    A guide to what financial advisors need to know about professional liability insurance.
  3. Financial Advisors

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  4. Home & Auto

    Cover Your Company With Liability Insurance

    Every business is susceptible to legal action. Find out how to protect yours.
  5. Home & Auto

    Filling The Gaps In General Liability Insurance

    Standard liability coverage may not be enough. Special needs call for specialized policies.
  6. 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.
  7. 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.
  8. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  9. Home & Auto

    Protect Your Company From Employee Lawsuits

    Understanding employment practices liability insurance is easy, once you know the basics.
  10. Term

    What's Compulsory Insurance?

    Compulsory insurance is insurance a person or business is legally required to buy.
RELATED FAQS
  1. Does renters insurance cover personal injuries?

    Learn what kind of coverage renters insurance provides against personal injury, and find out how to get discounts when shopping ... Read Answer >>
  2. 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 >>
  3. 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 >>
  4. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  5. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  6. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center