A financial instrument that takes care of all sorts of risks that come packaged with life itself, is insurance. You pay an insurance company a certain amount of money for a fixed period, in return of which, they agree to compensate you in case of any damages. They bear your financial risk in the event of any damage or injury to the insured asset or person. However, insurance companies are very specific about the type of damages they cover. So, when purchasing an insurance policy, you need to know the kind of damages that it covers you for. This is the most important part, which you need to study in the fine print of any policy agreement. If you have a bought a new car, it is mandatory that you buy liability insurance for it.
How Does it Work?
Liability is any kind of legal obligation that you can get into, as a result of any damage inflicted directly or indirectly by you. This may be any kind of financial obligation that you may get into to pay for damages. Liability insurance protects you from such liabilities if they arise. Such policies are offered for many purposes. Among the many types of this insurance, it may be offered to hedge against property damage, issues arising out of contractual obligations, and car damage.
Auto liability insurance is mandatory in most US states. On the other hand comprehensive auto insurance policy is an optional choice. Among the many kinds of damages for which such a cover is offered, one of the prime ones is damages inflicted by your car, on any other vehicle or person, in event of an accident.
There is a cover for bodily injury liability, as well as vehicle damage. The other types of coverages offered will vary according to the insurance company.
In Case of Home Owner’s Insurance
A home owner’s liability insurance primarily covers any kind of personal injury caused to a person when working on your property. This may also include damages caused to a third person’s property by the insured. The policy may include cover for bodily injury, as well as property damage liability.
In Case of Contractor’s Insurance
A contractor liability insurance covers for all the damages, personal injuries and property damage caused by a contractor’s work at a site. In most states, it is mandatory that contractors have it. This covers for any accidental damage caused to a property, or injury caused to a person, as a result of the contractor’s work.
The features of a liability cover will vary, according to the type of insured asset and the insurance company offering it. The only way to know exactly what kind of liability are you covered for, is to read the fine print of the policy document, before purchasing it. A comprehensive coverage insurance policy is a much better option compared to liability cover, as it offers a substantially more wide-ranging cover. Inquire about all the insurance options at your disposal before opting for one.