subject: Liability Cover For Protection Against Negligence [print this page] Liability cover is a type of insurance policy. A liability is anything you are responsible for. Insurance is a promise to compensate a person for potential future losses. The person pays a fixed amount of money for this promise periodically. The company giving the promise is called an insurer. The individual paying for this promise is called the insured person.
Insurance is of many types. While some are optional others are statutory. An individual looking for insurance selects insurance according to his requirements. What he selects is referred to as insurance policy. When an individual selects a policy to cover him for liability, he is protected against personal injury and property damage to a 3rd party.
When it comes to insurance, third party means another individual other than the person who is insured. As a result, the policy holder is not the one who is paid compensation for injury or damage. The compensation is instead paid to the injured person regardless of his not being party to the insurance contract.
Personal injury to a third party may include disability and injury among others. For example if a shopper slides and injures his leg in a shopping mall, he can seek compensation from the owner of the mall. Property damage suffered by a 3rd party includes physical loss or damage and others. For instance if your car hits another car and damages it, the owner of the car you have hit will demand compensation from you.
A liability policy protects the policy owner in 2 ways. Costs of any law suits against the cover holder are paid for by the cover. If the court awards a 3rd party compensation, all monies the policy holder is held liable for are settled by this insurance cover. It pays up to the maximum limit set by the policy.
In a lot of countries people who are at risk of being taken to court for negligence by 3rd parties are required to cover themselves against liability. They include manufacturers, employers, constructors and vehicle drivers. The work they do makes others to risk suffering injury or loss. They are required by law to insure themselves against liability so that in case of anything, compensation money will be available readily.
Liability cover is not compulsory for everybody. It is however something worth considering by business owners, home owners and others. People are becoming increasingly aware of their legal rights. It is therefore easy to be sued for negligence. Though you may not predict or stop the risks, you can at least transfer them to an insurer.
by: Katherine Jones
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