Third party liability insurance is the section of an insurance policy that covers any claims resulting from the injury of another person or the damage of their property. Third party liability coverage, also known as legal liability coverage, is included in both home and automobile insurance policies and will cover legal costs, lawsuit settlements and any related outlays such as lost income or travel expenses associated with a lawsuit. This article will go over the various aspects of third party liability coverage, how it works and why it’s important.
The Importance Of Third Party Liability Coverage
Unfortunately, accidents are part of life. However, accidents that result in serious injury or property damage may also produce lawsuits that have severe financial implications. Most people do not have enough money on hand to cover the costs of a large lawsuit and that’s where third party liability coverage comes into play. Third party liability insurance can be used to pay for the costs incurred by a lawsuit that may otherwise result in financial destitution or bankruptcy.
How Does Third Party Liability Coverage Work?
Third party liability coverage is specific to either your home insurance or your car insurance. If you injure someone or damage property while driving your car, it’s the section of your car insurance that will cover any liability. You cannot use your home insurance to cover damages incurred while driving. Similarly, having car insurance will not cover liability for any injuries or damages caused in your home. For this reason, it’s important to have third party liability coverage as part of both your home and car insurance policies.
How Much Liability Coverage Is Necessary?
There are usually minimum amounts of liability coverage required by both home and automobile insurance policies. Although these amounts are dependent on where you live, home and car insurance policies typically require at least $1 million of liability cover. However, if a claim is awarded that exceeds the amount of your coverage, you will have to pay the balance out of your own pocket. Therefore it’s important to ensure you have the proper coverage for your situation. When it comes to home insurance, variables such as home-based businesses or possible dangerous situations such as swimming pools or aggressive pets should be taken into account. As for car insurance, if you frequently travel during hazardous conditions or out-of-country, you may want to consider upping your liability coverage. Having a higher liability limit than required doesn’t necessarily cost a whole lot more, so it should be something to inquire about if your situation warrants it.
When Else Might Liability Coverage Be Handy?
You don’t necessarily need to face a lawsuit to be eligible for coverage. If you’re responsible for injuring someone or damaging their property, your insurance policy can still make restitution on your behalf without you being sued. Coverage for voluntary payments may be included as part of your policy, so it can be worth your while to get in touch with your insurance company if you find yourself responsible for an accident.
To find out more about how you can save on your home or auto insurance policy, contact an experienced professional at Bow Valley Insurance for a free, no-obligation quote.