Liability insurance is the cover that an insurance company provides to the insured in case of a civil lawsuit or if someone sues him for the claims that are included in the coverage provided by the insurer it is also known as risk financing. It was originated by a group of individual companies that faced a common hazard that needed their attention, for this they established a mutual fund out of which each member of the group was paid with the compensation in case of a lawsuit or other such condition. This self-help fund transformed into the business of liability insurance that insurance companies started to protect the professionals against the lawsuits that they might have to face in their professional life. An insurance agreement is done between the insurer and the insured but liability insurance is the amount that the insurer has to pay to the third party that is not a part of the agreement if any wrong that has been done to that party is the fault of the person insured. The damage or the harm that is inflicted intentionally is not covered by any insurance company under liability insurance. Whenever a claim is made against a person insured it is the duty of the insurance company to protect the person insured.
There come such situations in life when you have not done any harm to anybody deliberately but someone files a lawsuit against you nothing but liability insurance also known as an umbrella can become your support system. If you have already bought life insurance , car insurance ,rental insurance or property insurance you might feel that they are enough to provide financial protection for your family but in fact it is not so. If you are a self- employed person you should go for liability insurance for making your professional life secure. No matter if you are an employee to a company or a self-employed person there are a lot of risks involved in your professional life. There are a huge number of doctors out there who are sued each year by families of patients who could not survive due to the severity of illness but the families filed lawsuit against an honest doctor for showing negligence. In such cases where the person insured in not actually guilty it is the duty of the insurance company to provide adequate protection to the insured.
Though every buyer of liability insurances wishes that he does not need to use it nut purchasing it does provide you with a peace of mind much needed to
Who should buy liability insurance?
Not all the people require the liability insurance to protect them against lawsuits. The reason why people purchase liability insurance is the protection that is required for your income and assets .In case of property and residence several states have laws for the protection of your residence, so, in such cases there is no need for liability insurance. Especially if you are self-employed then you might have to face many hazards in your career including the most unwanted lawsuits for which buying liability insurance is the ultimate solution for the protection of your income and assets.