Liability Insurance Coverage in US

The insurance system in USA has numerous sub-categories and liability insurance coverage is a part of it. The main purpose of this coverage is to protect the client (person buying the insurance) from a variety of lawsuits and claims that could be slapped due to certain liabilities for which the client may be held responsible. However, it is imperative that these claims be covered by the policy offered by the insurance company.

Such claims or lawsuits are made by a third party and they are provided with the necessary payment by the insurance company in the case of any unfortunate event. In short, the person who gets the payment is neither the client (insured person) nor anyone from the insurance company. He is an outsider not included in the contract.

It is not only the right of an insurance company but also their duty to defend their clients. They usually use the services of their legal department to do so. All the legal costs involved are borne by the insurance company unless there is a statement in the contract stating otherwise.

There are 3 main forms of Liability Insurance coverage in USA:

  • Public Liability Insurance coverage: Many companies that produce goods etc that might end up endangering a third party, opt for this coverage.
  • Product liability Insurance coverage: This type of coverage is not compulsory but is beneficial to the individuals/companies. They prove to be beneficial to those who indulge in manufacturing goods that might pose as a threat on a large scale like mechanical equipments, products related to chemicals and pesticides etc.
  • Employer’s liability insurance coverage: This sub category of liability insurance is widely sought after in USA and is compulsory by law in many states. This coverage offers protection to the employer from any claims made by the employee during his/ her employment tenure. Any injuries or accidents involving the employee are covered by this type.

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