Understanding liability and protecting yourself from risks that lead to tort lawsuits is essential.

We are a litigious (lawsuit happy) society. The ability to file a “tort” lawsuit for any alleged act of negligence, even if groundless, supports an entire field of law for Personal Injury attorneys. The average person or business owner can be deeply affected both financially and emotionally when sued.

Liability Insurance was created to transfer the financial risk of tort lawsuit defense and judgment over to an insurance company in exchange for a predictable and affordable premium. Before liability insurance was developed the rich and powerful could use the cost of tort lawsuits to bully opponents with less financial resources. Fortunes were won and lost at the whim of lawsuits, even when groundless. So, the purpose and function of liability insurance is to provide a financial safety net against the cost of litigation and judgments for tort claims of negligence or other wrongful acts.

There are many kinds of liability insurance but the most common are:

• Personal Liability (most commonly as part of Homeowners, Renters, Condo and other dwelling policies)
• Personal Auto Liability (required in most states to operate an automobile)
• Personal Umbrella Liability (excess liability adding coverage over and above primary policies)
• Commercial General Liability (the most common coverage form for business liability)
• Commercial Auto Liability (for vehicles and trucks used in business)
• Professional Liability (errors & omissions coverage for professionals)
• Directors & Officers Liability (for profit and non-profit corporations)

NOTE: It should be noted that with few minor exceptions, liability insurance applies only to tort lawsuits that seek compensation as damages for an injury - not criminal cases that involve prosecution for violations of law. An act of negligence like causing injury when driving a vehicle while drunk may give rise to both tort lawsuits and criminal charges. Liability insurance responds only to the tort lawsuit and will not pay for defense of criminal charges which is considered not insurable as a matter of public policy.

Need liability insurance?

AMERICAN INSURANCE has liability coverage available for every kind of personal and business need. Contact us for the advice of our professional agents and free coverage quotations for any liability coverage that you need.

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