Liability Insurance

Protection against lawsuits if you're
to blame for damages to other parties

Liability insurance protects the policyholder from lawsuits or other legal claims. Liability is the legal term for responsibility. If you're held liable for some action that damages others, that means you're legally responsible and must pay damages to the injured parties.

Liability insurance is an important coverage for many types of insurance policies -- auto, homeowners and business. Any situation that exposes you to a risk of being sued for damages should be covered with liability insurance.

Some examples:

1. If a visitor to your home falls and is injured, you could be sued for damages. The liability portion of your homeowners policy would cover this.

2. If you have an accident while driving your car, and you are held responsible (liable), your the liability coverage of your auto policy would step in and defend you or negotiate a settlement.

3. If you own a business, and someone decides to sue you for selling them a defective product, or they're injured by your product, your liability insurance would pay for your defense.

The dollar amount of liability insurance you should carry depends on your financial situation. In these days of multi-million dollar structured settlements, you're wise to have the highest limits possible. You want to protect all of your assets so you won't lose everything if you lose a legal battle.

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