Liability Insurance which, is also referred to as third-party insurance, is an insurance policy that protects the insured party from claims that have to do with injuries afflicted on people or damages to property. This policy covers all pay-outs and costs that are legally valid that the insured party is responsible for.
This liability insurance is important to parties that undergo operations that have the potential to injure others or damage properties. In the medical field, for example, doctors make critical decisions that directly affect the health and lives of individuals. These decisions may require liability insurance to protect the hospital in the case of a lawsuit. Motorists are usually required to have insurance coverage to help them in cases of accidents that involve injuries to innocent bystanders or basically to any other person. Manufacturers of products often opt for product liability insurance to protect them in cases of lawsuits that may arise from products that are faulty or causes damage or injuries to its consumers.
Why Liability Insurance is Important
Liability Insurance does well to safeguard your future assets as well as your current ones in the event that you are being sued for an occurrence that you are legally responsible for. As an independent member of society or if you own a business or an organisation, It is advisable for you to have liability insurance coverage. The cost for this insurance might look like a waste now, as it is easy to think you have nothing to lose at the moment, but your future assets are at risk if you are responsible for damaging properties or injuring someone. It is not only one’s assets that are at risk, but future earnings as you may have to tender this when you run out of existing assets. It can happen that you have to appear in court, even though you are falsely accused. Your liability insuraqnce plan will cover the cost of the legal proceedings and defence lawyer.
This is when an insured party requests for assistance from their insurance company for the damage to a third party’s property or for causing an injury to a third party. The insurance company will only be of help if the liability insurance covers the type of injury suffered by the third party or the type of property damage. This assistance is usually done by paying a settlement to the affected party as compensation for the injury or damage. It can also include legal assistance when facing a lawsuit.
How Insurance Companies Determine Compensation during Liability Claims
Before the insurer can grant access to a liability claim, you and the third party will be interviewed to determine the events that led up to the injury or loss. There is a formula used to determine the value of damages.
At the beginning of the compensation negotiation process, there is normally an insurance adjuster that sums up the medical expenses that is related to the injury and this expense is used as a basis for the compensation. If the injury is said to be minor, the adjuster will multiply the amount to be paid by 1.5 and sometimes 2. If the injuries are more serious, it would be multiplied by 5 (or 10 in extreme situations). Sometimes, income lost as a result of this injury will be added.