What Does Liability Insurance Cover?

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Liability insurance covers injuries, accidents and negligence for which a person or business is held responsible, according to Investopedia. A liability insurance policy pays for the medical expenses and compensation to the individual involved and other costs associated with a lawsuit, such as lawyer fees and court costs. A liability insurance policy saves a person or business from losing large sums of money due to a lawsuit.

There are different types of liability insurance to cover different circumstances, such as personal liability insurance, professional liability insurance, employment practices liability insurance and comprehensive general liability insurance. Personal liability insurance is included up to certain limits in the typical homeowners insurance policy. Personal liability umbrella coverage provides coverage for those who require higher personal liability coverage than that afforded under their homeowners policies, according to Travelers.

Professional liability insurance is for professionals, such as accountants and dentists, who are at risk of being sued due to the services they provide, according to State Farm. Employment practices liability insurance protects an employer against employee lawsuits, such as those stemming from wrongful termination or discriminatory hiring practices, according to Nationwide. Comprehensive general liability insurance covers claims for accidents, injuries and damages that occur as a result of business operations, according to Geico.