Liability insurance

Liability insurance is a contract that indemnifies the insured against legal responsibility for bodily injury or property damage to third parties. Liability insurance policies in the United States include examples such as general liability, professional liability, and auto liability coverage.

Liability insurance covers court costs and legal fees, with payouts typically capping at policy limits; for example, $100,000 per incident for many personal policies. Auto liability insurance remains mandatory in 49 states, with minimum limits like California’s $15,000 per person/$30,000 per accident for bodily injury liability.

General liability insurance often covers premises-related injuries like customer slip-and-fall accidents in stores. Professional liability insurance protects professionals such as doctors and accountants from claims of negligence or malpractice.

Liability insurance excludes intentional acts and contractual liabilities unless specifically endorsed. Businesses obtain liability insurance to protect assets from lawsuits related to product defects and advertising injuries, citing cases like product recalls involving large retailers.

Umbrella liability insurance increases coverage above primary policy limits, commonly adding $1 million or more for individuals and companies. Policyholders pay an annual premium based on risk factors such as industry, claims history, location, and coverage amount–for example, small businesses may pay $500–$3,000 annually for general liability, per YourInsurance.info.

Filing a liability claim requires prompt reporting of incidents to insurers with documentation such as police reports, witness statements, or photos of damages.