A Beginner's Guide to Liability Insurance

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Liability Insurance protects you from paying out of pocket for anyone who suffers injury or death near or in your home or place of business. You can purchase Liability insurance on your own or as part of a business, auto, contents or home insurance policy.

Liability insurance also protects you from claims by trespassers. Believe it or not, this can include burglars who are injured during the course of robbing you at your business or home! It can also protect you against accidents that may befall passers by, such as a fall on an icy sidewalk and accidents that occur during the renovation or repair of your building. If members of the public or customers regularly visit your premises, then you should definitely think about taking out public liability insurance. This is also true of homes that attract curiosity seekers or children seeking a swim in your pool.

Liability insurance allows you to pay any compensation awarded to the injured party as well as any fees or expenses that you might incur during the legal process.

The cost of the premiums depend on the type of business home, vehicle or property that you own, the area you live in, as well as the number of employees you have. If you work from home, public liability insurance is also a good idea.
The cost of your individual insurance is typically worked out with the assistance of an insurance broker. The insurance broker uses a book rating to determine your potential costs. This is calculated using a base rate, which includes the insurer's costs of serving businesses that are the same or similar to yours. If insuring the cost of your type of activity or business has proven to be expensive for the insurance company in the past, then the cost of your liability insurance is going to be higher.

The insurance broker will also calculate your premium according to an estimate of the level of risk attached to your particular business. The cost of your premium will also be affected by the number of insurance claims you have made before and your approach to risk management. The safer your home, vehicle or business, the less you are likely to be charged for your premiums.

If you are applying for employers' liability insurance, the exposure risk is assessed based on the number of employees you have and the size of the payroll. For public and products' liability the exposure risk is based on how well you sell and such factors as whether you work away from your premises. For instance, the owners of a school that teaches horseback riding are probably going to pay higher premiums for liability insurance than a store that sells soft pillows.

There are many conditions, exclusions and warranties that can be applied to liability insurance policies. It is therefore important that you discuss with your insurance adviser any issues that pertain to your life that are applicable to your policy. A good broker will be able to advise you of the best type of liability insurance for you.

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