What is Liability Insurance and why do you need it?
The future can never be planned, there are always uncertainties and inconsistencies that cannot be predicted. This is why insurance is a necessity to provide an individual with some sort of security for the future.
In this day and age, a variety of types of insurances are available for people to choose from. One such insurance policy is liability insurance. Simply put, liability insurance protects the insured parties if they are liable for any damage or injuries to other people and their properties.
While in general insurance policies, the policyholders are reimbursed, in a liability insurance policy, the reimbursement goes to the third party who has suffered any injury or damage to property at the hands of the policyholder.
The insurance company protects and covers against claims made by a third party in case of bodily harm or damage to property. Usually, in liability insurance, the coverage for both legal costs and financial payouts an insured person is responsible for are provided, but only in case, the damage is unintentional.
Intentional damage usually does not come under the coverage of liability insurance policies.
Who should buy liability insurance?
This type of policy is a must for individuals or companies who can be held liable for any damage to a third party. Usually, it is suited for medical professionals, drivers, pharma firms, adventure sports firms, etc who can be sued for any kind of damage to others.
For instance, if a pharma firm manufactures a product that causes massive side effects to its consumers. The firm can easily be sued for the same. This type of insurance protects the firm and covers its legal and financial liabilities to the people impacted by its product.
Why should you buy it?
Risk management is a very important aspect for individuals as well as businesses. This policy can protect you against financial turmoil and legal consequences in case of any damage caused to a third party. Especially for individuals in the service, healthcare, auto industry, this policy is a boon.
What is liability insurance?
1) Public liability cover: This policy is for companies that deal a lot with the public like malls, retail shops, theatres, clubs, etc. It protects them in case of emergencies or any mishaps.
2) Professional Liability insurance: This is for individuals like medical professionals, drivers, lawyers, CA, that need protection from their clients/patients against claims regarding neglect, error, etc.
3) Employer Liability: This policy is for companies who want to cover the liabilities of employees in case of any mishaps on the job. This is suited for hospitals, cab companies, other service companies like plumbing, electrical, movers, etc.
4) Product Liability: This policy is for firms whose products reach the public, in order to avoid any claims or lawsuits in case of a side effect like pharma firms, tobacco companies, liquor companies, food firms, chemical industry, etc.
5) Third-party liability: This policy is suitable for any individual or small firm that wants coverage against damage caused by them to a third party.
In order for the claim to be reimbursed by an insurance firm under a liability policy, these are the main components required
FIR: The third party always has to file an FIR at the nearest police station in case of any mishap. This document is needed by the insurance agency to verify details, and process the claim.
Coverage: Generally, such policies do not have a fixed coverage amount. The payment to the third party is decided depending on the extent of the damage as per the pre-fixed terms and conditions.
Other Documents: Depending on the damage or injury to the third party or their property, other documents like proof of ownership, proof of damage, medical bills in case of injury, etc will also be needed.
Other key things to know:
Premium: The premium depends on a number of factors but the most important one is risk. The higher is the risk of any damage, the higher is the premium of the policy.
What is covered: Different insurance firms have different types of liability plans. It is not necessary that all kinds of damage are covered under your plan. It is important to note which ones are covered and which ones are not. Some policies may cover physical injury but not damage to property, some vice versa. The policyholder must be clear about what the policy covers.
Regardless of how careful someone is, everything cannot be planned, the uncertainties just exist. Liability insurance helps cover any third-party injury or property damage which can save a lot of financial as well as legal distress.
Thailand Insurance Service is always happy to answer any questions on these policy issues and steer buyers towards making informed insurance purchase decisions.