Liability Insurances & What they Cover

Also called a third-party insurance, a liability insurance is a type of insurance that covers the insured up to a certain amount, if they happen to break something that doesn’t belong to them and are faced with lawsuits and fees. The policies cover legal costs for which the insured party is found to be legally liable. Intentionally placed damages are contractual liabilities are generally not covered through these insurances.

Types of Liability Insurances

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There are many subtypes of liability insurances, but the main ones are as follows:

Private Liability Insurance

This is an insurance for a private person. With this type of insurance, you don’t have to stand for the costs if you accidentally break or damage something that belongs to a third party. Personal or private liability insurances usually make sense for individuals that might have a higher risk to be sues, such as landlords. Nevertheless, it is also recommended for any private person to have as various types of home damages can be covered as well.

One such example of this type is snowmobile insurance. In the past, snowmobiles were only for leisure activities, but in places like Canada, this has become their primary mode of transportation during winter. This is why all snowmobiles must have insurance before you take them out of your garage. 

Like any other vehicle, a snowmobile could be prone to accidents, especially because it’s used in dangerous situations where there’s slippery snow on the ground. Any collision could hurt the driver or the person they hit or incur property damage. Hence, it would be best to get insurance so you know that all medical expenses can be covered, and in the event of death, even the funeral expenses will be shouldered by the insurance. With this insurance, you can enjoy riding your snowmobile without worrying about those things.

Business Liability Insurance

An insurance policy for businesses. Both small and big businesses benefit from an insurance like this. This type of insurance protects the financial interests of business owners and businesses in the event that they will have to face legal issues and third-party claims. They usually cover legal expenses and direct financial liabilities.

What does a Private Liability Insurance Cover?

The most common type of insurance coverage for third party damages is the private liability insurance. Taking a closer at this type of insurance, there are 4 things that they will usually cover in the case of a loss or damage that most relate to us:

1. Lost keys

Door keys - types of liability insurances - 438398298198Losing keys is a common thing that happens to all adults. In fact, it’s been ranked as the item adults most commonly lose, with phones, pens and glasses ranking slightly under.

A personal liability insurance will often cover the loss of keys that don’t belong to you, for example the keys to a rented apartment.

2. Damage caused by animals
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Small, tame animals like cats or birds can easily end up causing damage to rented things or apartments. These damages caused by small animals will usually be covered by a private liability insurance, even if damage by bigger animals like dogs or horses may require you to get a separate insurance. Guests who get bitten by your dog become your responsibility because you invited these people into your home, so you have to ensure their safety and security. A pet like a large dog can cause serious injury when they’re not used to seeing other people. Under the law, this is called premise liability; this implies that as the property owner, you are responsible for the standard of care given to your guests.

3. Damage to a rented apartment

Water pipes and all kind of similar things can act up and can end up also damaging floors, walls, and roofs, making it even more expensive to replace. So then, by having a personal liability insurance, the insured can rest easy they won’t have to pay full price if something happens to an apartment they rent.

4. Damage to something rented

A lot of people feel nervous when renting something. They know if they break it, they’ll have to pay to replace it, and the whole thing is a lot more daunting than using your own things and may take the joy out of it. An insured person doesn’t have to worry so much about this, and can just concentrate on using and enjoying whatever it is they are renting.


Interesting related article: “What is Liability?”