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Features
Ref. No. KLI/22-23/E-BB/492
Liability insurance policies protect businesses from financial losses due to claims of injury, property damage, and errors in professional services.
Ever wondered what happens if someone gets hurt on your property or if a client sues you for a mistake in your profession? That’s where liability insurance comes in. It’s like a safety net for your business, covering you when things go wrong. No matter if you’re running a small shop, a big corporation, or offering professional services, knowing liability insurance is crucial. Read ahead to explore what it covers, how to make a claim, and the common exclusions you need to watch out for.
Liability insurance is designed to protect you financially if you’re found legally responsible for injuring someone or damaging someone’s property. It covers the cost of legal fees, settlements, and any judgments awarded by the court up to the policy limit. Without this coverage, you could be personally responsible for paying these costs out of pocket, which can be financially devastating.
Liability life insurance comes in many forms, each designed to cover specific scenarios. Let’s break down some of the key types of liability insurance policies that businesses often need to consider.
Commercial Liability Insurance, also known as General Liability Insurance, is the foundation of business insurance coverage. It protects your business against claims of bodily injury, property damage, and personal and advertising injury. Whether a customer slips and falls in your store or you accidentally damage a client’s property, this policy helps cover the costs.
Director’s and Officer’s (D&O) Liability Insurance protects the personal assets of corporate directors and officers and their spouses if they are personally sued by employees, vendors, competitors, investors, customers, or other parties. It covers legal fees, settlements, and other costs associated with defending against allegations of wrongful acts in their capacity as directors and officers.
Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, is tailored for businesses that provide professional services. It covers claims arising from mistakes or negligence in the services you provide. If a client believes your advice or service caused them financial harm, this insurance helps cover legal defense costs and settlements.
Commercial Crime Insurance protects businesses against losses resulting from criminal activities such as theft, fraud, and forgery. This policy covers both internal crimes (committed by employees) and external crimes (committed by outsiders).
Carrier Legal Liability Insurance is specifically designed for businesses in the transportation and logistics sector. It provides coverage for legal liability arising from the loss or damage of goods while in transit.
Product Liability Insurance is crucial for manufacturers, wholesalers, distributors, and retailers. It covers claims of injury or damage caused by products sold or supplied through your business. If a product you sold causes harm, you could be held liable for the damages.
Trade Credit Insurance protects businesses against the risk of non-payment from clients. It ensures that you receive payment for goods or services you sell, even if your customer is unable to pay due to insolvency or other issues.
Public Liability Insurance protects your business against claims of injury or damage to third parties arising from your business activities. It covers legal costs and compensation payments if someone is injured or their property is damaged because of your business operations.
Let’s walk through a typical scenario of a slip and fall at your business to understand how liability insurance works in real life.
Imagine you own a small café. One day, a customer slips on a wet floor, falls, and breaks their arm. They decide to sue you for medical expenses, lost wages, and pain and suffering. Here is how your liability insurance would come into play:
Filing a Claim: Once you’re notified of the lawsuit, you contact your insurance company to file a claim. You’ll need to provide details about the incident and any related documentation.
Investigation: Your insurance company will investigate the claim to determine its validity. They might review security footage, talk to witnesses, and assess the extent of the injuries.
Legal Defense: If the claim is valid, your insurance company will typically cover your legal defense costs. They might appoint an attorney to represent you.
Settlement or Court: If the case goes to court and you’re found liable, or if a settlement is reached out of court, your insurance will cover the awarded amount up to your policy limits. For example, if you have a ₹500,000 policy limit and the court awards ₹300,000 in damages, your insurance will cover the entire amount.
General liability insurance is a must-have for most businesses. It covers a wide range of potential risks, including:
Also known as errors and omissions (E&O) insurance, professional liability insurance is essential for service-based businesses. It covers:
If your business manufactures, distributes, or sells products, product liability insurance is crucial. It covers:
This type of insurance is specifically for businesses with employees. It covers:
Understanding the eligibility criteria for purchasing liability insurance is essential for ensuring adequate protection.
Whether you’re a small business owner, a contractor, or an individual, understanding what’s included in liability insurance can help you make informed decisions to safeguard your assets and future.
If your business or organization needs to claim liability insurance, here’s what you should do:
To make a claim under different types of liability insurance, it’s important to know which documents you’ll need to submit. Here’s a quick look at them:
Liability insurance is an essential part of protecting your business from the unexpected. It covers a range of incidents, from accidents on your premises to errors in your professional services. Knowing how to file a claim and understanding what your policy excludes can save you a lot of headaches down the road. Think of it as your business’s shield against potential financial losses and legal troubles. With the right liability insurance in place, you can focus on what you do best, knowing you have a safety net if things go awry.
1
The amount of coverage you need depends on your business’s size, industry, and risk level. It’s best to consult with an insurance advisor to determine the appropriate coverage.
2
General liability insurance covers bodily injury, property damage, and advertising injury. Professional liability insurance, also known as errors and omissions (E&O) insurance, covers claims related to professional services, such as negligence or mistakes.
3
The cost is based on several factors, including the type and size of your business, industry risk, location, and your claims history.
4
Yes, liability insurance can help protect your personal assets by covering claims and legal fees up to the policy limit, reducing the likelihood of personal asset exposure.
5
To file a claim, complete a claim form, gather necessary documentation (such as reports, photos, and witness statements), and submit them to your insurance provider. Follow up with the insurer for any additional information they may require.
6
Common exclusions include intentional harm, contractual liabilities, employee injuries (covered by workers’ compensation), and damages from illegal activities. Always review your policy for specific exclusions.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
