If you’re an owner of a small business, you’ve probably been faced with the crossroads of choosing whether or not to purchase a liability insurance plan. We advise that, for most small businesses, purchasing a liability insurance plan is a must. Many small businesses have yet to embrace the importance of liability insurance, even if they understand the potential financial risks of serving customers, whether online or off. But small business owners have no right to put themselves and their businesses at financial risk. When you self-insure and you don’t have insurance as a backup, it can be disastrous.
In most places, auto liability insurance is a sort of car insurance that is required by law. Liability coverage helps pay for the other person’s expenditures if you cause a car accident — in other words if you are at fault for the accident. Bodily injury liability coverage and property damage liability coverage are the two types of auto liability coverage. In most states, drivers must carry both types of insurance.
What does liability insurance cover?
Liability insurance is included in many types of insurance coverage. In general, it assists in the repair of another person’s property or the payment of medical bills if the policyholder is judged to be at fault for the damage or injuries. These two forms of coverage in auto liability insurance assist pay another person’s medical expenditures and property damage:
Bodily injury liability coverage
If you cause an accident that causes another individual to be injured, bodily injury liability coverage can assist pay for their medical bills. For example, this coverage may allow you to avoid paying for the wounded person’s X-rays and treatment out of pocket.
Property damage liability coverage
Property damage liability coverage helps pay for repairs if you cause an accident that destroys someone else’s property (such as their automobile). For example, if you rear-end another car, this coverage can assist you to avoid having to pay for the other driver’s vehicle repairs out of pocket.
Limits on liability insurance coverage
The amount your insurance company will pay for a covered liability claim is determined by the coverage limits you select. Drivers are required to acquire minimum coverage levels for bodily injury liability and property damage liability in each state, but you may choose to purchase additional coverage. Your automobile insurance policy may have three liability coverage limits:
Liability for property damage is limited
This is the maximum amount your insurer will pay to repair damage to someone else’s property that you cause. The maximum payout would be limited to the amount you’ve specified.
Liability limit for bodily injury per person
This specifies a maximum payment for each person wounded in an accident caused by you.
Liability limit for bodily injury per accident
This limits the total amount your insurance company will pay out for all medical bills incurred by others as a result of a single accident you cause. It’s critical to set this limit at a level that’s comfortable for you, as it may be required to assist pay for numerous people’s medical expenditures. The majority of insurance combine physical injury and property damage limitations. For example, you might be able to get auto liability coverage with the following limits:
($25,000 bodily injury per person, $50,000 bodily injury per accident, $10,000 property damage limit)
100/300/50 ($100,000 bodily injury per person, $300,000 bodily injury per accident, $50,000 property damage limit)
Your coverage limitations will be determined by the insurance packages offered by your insurer; for example, you may not be able to select separate limits for physical injury and property damage coverage.
What is the cost of liability insurance?
The cost of liability insurance is determined by a variety of factors, including the amount of coverage you choose. The larger your liability insurance coverage limit, the more you’ll likely pay. If you raise your limit, your insurance agent can tell you how much your policy will cost.
What is not covered by liability insurance?
After an accident, liability coverage usually does not pay to repair damage to your own automobile; collision coverage does. It also doesn’t cover damage caused by other sources like hail, which could be covered by comprehensive coverage. Liability coverage also does not cover the price of your own injuries if you cause an accident. Medical payments coverage may be a good option if you desire this type of coverage. Your insurance agent can assist you with questions concerning motor liability insurance and the coverage requirements in your state.