13 Facts About Liability insurance

Liability insurance is a part of the general insurance system of risk financing to protect the purchaser from the risks of liabilities imposed by lawsuits and similar claims and protects the insured if the purchaser is sued for claims that come within the coverage of the insurance policy.

Liability insurance is designed to offer specific protection against third-party insurance claims, i e, payment is not typically made to the insured, but rather to someone suffering loss who is not a party to the insurance contract.

Liability insurance is far more prevalent in the advanced than emerging markets.

Liability insurance insurers have one, two or three major duties, depending upon the jurisdiction:.

Duty to defend is prevalent in the United States and Canada, where most liability insurance policies provide that the insurer "has the right and duty" to defend the insured against all "suits" to which the policies apply.

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Traditionally, liability insurance was written on an occurrence basis, meaning that the insurer agreed to defend and indemnify against any loss which allegedly "occurred" during the policy period as a result of an act or omission of the insured.

Not surprisingly, insureds recognized what the Liability insurance industry was up to in trying to use claims-made policies to push a substantial amount of risk back to insureds, and claims-made coverage was the subject of extensive litigation in several countries throughout the 1970s, 1980s, and 1990s.

One way for businesses to cut down their liability insurance premiums is to negotiate a policy with a retained limit or self-insured retention, which is somewhat like a deductible.

In many countries, liability insurance is a compulsory form of insurance for those at risk of being sued by third parties for negligence.

Businesses must consider all potential risk exposures when deciding whether liability insurance is needed, and, if so, how much coverage is appropriate and cost-effective.

In turn, workers' compensation insurance is regulated and underwritten separately from liability insurance.

Where the carrying of a policy is not mandatory and a third party makes a claim for injuries suffered, evidence that a party has liability insurance is generally inadmissible in a lawsuit on public policy grounds, because the courts do not want to discourage parties from carrying such insurance.

Typically, professional liability insurance protects technology firms from litigation resulting from charges of professional negligence or failure to perform professional duties.