When is liability insurance required

A few months later, you change your liability policy to XYZ Insurance. A month after you go with XYZ, Mae amends her original lawsuit. She now contends that her wrist has not healed properly and seeks additional medical payments for the cost of surgery and higher damages for her lost income, expenses to her family because of her injury and for pain and suffering. The limits of your coverage are set forth in your policy "Declarations. The amounts are the most the insurer will pay, regardless of the number of persons or organizations making claims or bringing suits against you.

A single occurrence can produce many costly liability claims. If a fire due to your negligence spread from your building to destroy several neighboring structures and caused a death, the value of all the claims against you could be significant even though there was only one occurrence. In addition to these limits for one occurrence, the policy has aggregate limits.

Aggregate limits are divided into two sections:. If you manufacture, sell or distribute a product, there is the possibility that it could cause bodily injury or property damage for which you would be legally liable. Even if you only sell or distribute the product, you could still be liable depending on the circumstances. For example, a contractor installs a steam heating system and three months later it leaks and causes property damage.

The "products completed operations" hazard covers each of the above risks under certain conditions. When a product is involved, to be covered, the injury or damage must occur away from your own premises—unless your business includes the selling, handling or distribution of your product for consumption on premises you own or rent. Intangible property, such as digital data, would not be covered. If you rent or lease a building or part of a building, you could have a fire liability risk.

Should a fire caused by your negligence burn your rented premises and other property owned by your landlord, you could be liable for the damage.

If you rent or lease business premises, be sure to discuss with your agent how much insurance you need to cover your fire liability exposure. A number of situations, people and circumstances are excluded from the standard BOP liability coverage. There are various reasons. Injuries to employees are excluded because employees are usually covered for work-related injuries by workers compensation insurance.

Liability for pollution or in connection with professional services is excluded because only some businesses need that coverage and it can be purchased separately. Auto liability is excluded because it is covered by a businessowners auto policy. Damage to your own property is excluded because it is covered by your property insurance.

The standard policy form does not provide coverage for a recall of products, work or impaired property due to a suspected defect, deficiency, inadequacy or dangerous condition. You may purchase a Product Withdrawal Expense Endorsement to cover some of this risk. By acting quickly, your insurer can often settle a liability claim and head off a costly lawsuit.

For this reason, insurers require that you inform them as soon as practicable when you are aware of an occurrence that may result in a claim, even if no lawsuit has been filed. As part of your insurance contract, you are required to give this notice and to provide information about the occurrence, including names and addresses of anyone injured and any witnesses, as well as the nature of any injuries or damage.

You also agree to cooperate fully in the investigation of the incident. Endorsements are additions to insurance contracts that change the coverage. Endorsements can add liability coverage for specific circumstances to the BOP. Among those most commonly added are:.

Contact an Allstate agent. Quality Auto Coverage Starts Here. Get a quote Find an agent. Auto liability insurance helps cover another person's medical expenses and property damage via these two types of coverage: Bodily injury liability coverage sometimes abbreviated as "BI" If you're at fault for an accident that injures another person, bodily injury liability coverage helps pay for their medical expenses.

Property damage liability coverage sometimes abbreviated as "PD" If you cause an accident that damages someone else's property their car, for example , property damage liability coverage helps pay for repairs. You may see three liability coverage limits on your car insurance policy: Property damage liability limit.

Bodily injury liability limit per person. Bodily injury liability limit per accident. Quiz: Auto Liability Insurance. You answered out of correct! Get a Quote Find an Agent. This content is for informational purposes only and may not be applicable to all situations. Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Connect With Us. Update Below. ZIP Code. City, State Set Your Location. You have entered an invalid ZIP.

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Skip to main content Toggle navigation Log in. Edit location. Select a product to get a quote. Register new account Pay your bill. Get your ID cards. Updated: November If you cause an accident or someone is injured on your property, you could be found legally liable for resulting expenses, such as medical or legal bills. Find an agent. Learn more about auto liability coverage. Learn more about home liability coverage.

Learn more about renters liability coverage. Learn more about condo liability coverage. Learn more about boat liability coverage. Learn more about motorcycle liability insurance. Learn more about ATV liability insurance. Learn more about snowmobile liability insurance. Learn more about landlord liability insurance.

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These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Insurance Liability Insurance. What Is Liability Insurance? Liability insurance covers legal costs and payouts for which the insured party would be found liable.

Provisions not covered include Intentional damage, contractual liabilities, and criminal prosecution. Liability insurance is often required for automotive insurance policies, product manufacturers, and anyone who practices medicine or law.

Personal liability, workers' compensation, and commercial liability are types of liability insurance. Liability insurance is also called third-party insurance. Compare Accounts.