If you are about to buy an insurance policy, it is for sure that you are going to come accross with the term ‘liability insurance’. This article will teach you the concept of liability insurance in a quite simple way.
Liability Insurance Definition
Before I start making an explanation about liability insurance, let’s see how it is defined by Cambridge Dictionary;
insurance that you buy to protect yourself in case something or someone you are responsible for is damaged or injured in some way.
Liability Insurance – Easy Definition
In a nutshell, if you by a liability insurance, you insure yourself for your actions that hurt other people or the property of people around you. Thus, liability insurance pays for the damage you do, not the damage that is done to you.
Liability Insurance With an Example
Liability insurance can be understood in a more clear way by the aid of an example.
Let’s assume that you have a car and you are driving your car on an empty road. There are some other cars parked by the road and you crash one of these cars. As might be expected, the owner of the parked car does not have any fault in this occasion. So, it is all your fault to crash the parked car and you have to pay for it.
At this point, if you have a liability insurance policy, your insurer will pay for your fault, this is to say that your insurance will pay for the repair of the car that you crashed.
To sum up in an easy-to-remember way, your liability insurance passes your liabilities to the insurance company. After that, your insurance company becomes responsible for your actions within the limitations of the coverage of your insurance policy.