Liability Insurance

How Liability Coverage Works

A comprehensive guide to understanding liability insurance and how it protects you.

How Liability Coverage Works

Liability insurance is one of the most important types of coverage you can have. It protects you from financial loss if you're found legally responsible for causing injury or property damage to others.

Understanding Liability Insurance

Liability insurance doesn't cover your own losses—it protects you from claims made by others. When you're at fault in an accident or incident, liability coverage helps pay for:

  • Medical expenses for injured parties
  • Property damage repairs
  • Legal defense costs
  • Settlements or judgments

    • Types of Liability Coverage

    General Liability

    Covers common risks for businesses and individuals, including:

  • Slip and fall accidents on your property
  • Accidental damage to someone else's property
  • Personal injury claims

    • Professional Liability

    Also known as Errors & Omissions (E&O) insurance, this protects professionals from claims of negligence or mistakes in their work.

    Product Liability

    Protects businesses from claims related to products they manufacture or sell.

    Umbrella Insurance

    Provides additional liability coverage beyond your standard policies, typically starting at $1 million.

    Coverage Limits

    Liability coverage is usually expressed as three numbers (e.g., 100/300/50):

  • **First number**: Maximum per-person bodily injury coverage
  • **Second number**: Maximum per-accident bodily injury coverage
  • **Third number**: Maximum property damage coverage

    • Why You Need Adequate Coverage

    Insufficient liability coverage can leave you personally responsible for costs exceeding your policy limits. This could mean:

  • Loss of personal assets
  • Wage garnishment
  • Financial hardship for years

    • Choosing the Right Amount

    Consider these factors when determining your liability coverage needs:

  • Your total assets
  • Your income level
  • Your profession and risk exposure
  • State minimum requirements

    • Real-World Example

    If you cause an accident resulting in $200,000 in medical bills but only have $100,000 in liability coverage, you could be personally responsible for the remaining $100,000. Umbrella insurance can help bridge this gap affordably.

    Get Expert Guidance

    Determining the right amount of liability coverage can be complex. The team at Chris Carson Insurance Agency can help you assess your risks and find appropriate coverage to protect your financial future.