Liability Insurance in US

Liability insurance is a type of insurance cover which is meant to defend the company’s insured clients in case of legal lawsuits and monetary claims made by a third party, due to the actions of the insured client. The insured person is required to give an annual or a monthly premium to the insurance company and only then will the company offer reimbursement or incur the costs of the lawsuits.

Liability insurance in USA has been created to specifically tender to its clients so as to protect them from claims made by a third party. Here, the payment is made to the individual who is not a part of the insurance contract but who has suffered a loss.

Liability insurance in USA does not cover the damages that are resulted due to contractual liability or due to intentional damage caused by the insured client of the insurance company.

The insurance company has the legal right to defend their clients and it is generally supposed to defend its clients in case of a lawsuit. The costs of the lawsuit is generally incurred by the company unless the contract or the policy otherwise says so.

In several countries Liability insurance is compulsory under the country’s laws. There are 3 main forms of Liability Insurance in USA:

  • Public Liability Insurance: This form of liability insurance is obligatory in many states but the laws for the same vary from state to state. The individuals or the companies who indulge in manufacturing goods or activities that are likely to pose a threat to a third party are ought to cover themselves under this type.
  • Product liability Insurance: This type of insurance is not compulsory but it is a must for individuals who manufacture products like asbestos, tobacco, mechanical equipments, products related to chemicals and pesticides in general, as all those products which can pose a potential threat to others.
  • Employer’s liability insurance: In this type all the potential liabilities that can be caused to the employer of a corporation by means of an employee getting injured during the period of their employment are covered by the insurance company.

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