Liability insurance, also known as third party insurance, is a type of insurance policy that protects the insured party from various claims & risks derived from the damages done to the third party. Above all the main advantage of this type of insurance is that the insured is not liable for any damages done to the people or property if they are found legally liable. As an example: – if a surgeon makes a mistake while performing a surgery, the insurance company will be responsible for remuneration to the third party. While the surgeon cannot be held liable for those damages whatsoever. We can expect damages throughout our normal life. Liability insurance helps to minimize them.
As we have a general idea about liability insurance, here are some benefits that we can enjoy through it.
Liability Insurance Pros:
1. Risk management
We can experience damages throughout our normal life. Liability insurance helps to minimize them. We cannot predict when such problems may arise, we should at least prepare in case of such an emergency. Hence liability insurance can help in the effective & productive utilization of our valuable time.
2. Third-party Health care benefits
In case of injury to the third party, the insured is not liable for the damages. But the insurance company is liable for those compensations. Generally, coverage for medical expenses there is not any legal intervention to claim it. Thus it helps in quick settlements. And, also provides various health care benefits for the third party.
3. Increases creditability
If the organization has some sort of liability insurance, investors and stakeholders are most likely to invest in the organization. Likewise, the clients are reluctant to be held liable for the damages done by the organization. Hence Liability insurance ensures safe investing opportunities which can help the organization grow and prosper in the future.
4. A protective charm
Liability insurance can also work as a protective charm. Furthermore, it protects the individual or organizations from any legal charges done against them by the third party. It helps to maintain and protect the brand image as well as increase the goodwill of the insured. Also, the insurance company cares for all the legal expenses, leaving no worry to the insured party.
Similarly, there are various negative aspects to liability insurance which we need to know before planning on purchasing liability insurance. Below are some of the points of most common cons of liability insurance after this.
Liability Insurance Cons:
1. Denial of claim
The insurer can outright deny the insurance claim as a whole if it deems that the damage done is not included in the insurance policy. Furthermore, it can also deny the claim if found that the intentional damages. Thus one must choose the insurance policy while considering various unknown factors which may arise shortly.
2. Costly & Time consuming
Liabilities insurance can be costly as the probability of damages increases. The higher the risk, the higher will be the interest for the insurance. Furthermore, it can also be a time-consuming process in case of damage to the third party. In short, it can take a lengthy process to evaluate the cost of damages & to conclude that the claim is within the coverage of the insurance policy.
3. Slow & Untimely payments
After the evaluation of the damage done by the insured, the insurance company can withhold or partially pay the third party. Such actions can lead to various problems & difficulties for the third party involved. In short, this can lead to various legal issues & can affect the insured as well as the insurance company as a whole.
4. Uneven protection
Liabilities insurance cannot always ensure all-around protection to the insured. The insurance company is only liable for the claims on the agreement. Anything other than those claims is not covered by the insurance company. In addition to the basic insurance, the insured must pay for the additional amount to get higher insurance coverage which in turn increases the cost of the insurance as a whole.
Our final thoughts
Liabilities insurance is an additional risk management strategy that can in turn help the insured & the third party equally in case something goes wrong. It helps both parties to reach a settlement quickly and to remunerate the losses accordingly. In short, the benefits outweigh the disadvantages. Thus it is believed to be a necessary expense & many counties make it mandatory by the law.