General Liability Insurance
This type of insurance protects the individual policyholder from damages arising out of a third-party lawsuit. Typically the lawsuit is filed by a party not contractually involved with either the policyholder or the insurance carrier. The person or entity filing suit claims the policyholder is somehow responsible for the plaintiff’s damages. Those damages can be physical, financial or emotional in nature.
General liability insurance is often part of a homeowners or renters insurance plan. It is separate from the plan’s property replacement coverage and deals with parties accusing the policyholder of causing injury or damage to another. In some cases, this damage is physical such as a guest at the policyholder’s dinner party slips in the kitchen and fractures a wrist by falling or by having the insured’s dog bite the guest. Other types of damage that would fall under the responsibility of general liability coverage would be financial or emotional damage, such as when the policyholder is accused of libel or slander against another party. When such claims are made against a policyholder, the carrier steps in and either pays out the claim, up to the policy limits, or incurs the cost to defend the policyholder against the claim. Such defense can include paying to take depositions from witnesses, preparing a trial case, interviewing experts for testimony and seating a mock jury to determine the probably outcome of taking the case to trial.
Though the insurance company incurs the cost of defending the policyholder against a claim, the policyholder is responsible for cooperating with the defense. This means being available for deposition, interviews and testifying if needed. If the carrier believes it will lose the suit, or the claim is too small to spend a lot of resources defending, the carrier has the option to pay out the claim to the plaintiff or the plaintiff’s representative.
Many general liability insurance policies include a clause protecting the carrier from an expectation of coverage when the damage is caused by illegal activities by the insured. In such cases, the insured is solely responsible for damages arising from the trigger event.
In addition, most policies include an exclusionary clause that names certain breeds of dogs that will not be defended against. The bully breeds, including Pit-bulls, Rottweilers, Doberman Pincher and others are typically excluded from a liability policy. This means if the policyholder owns one of the named breeds and the dog causes physical injuries to a third party, the insurance company will not pay benefits, nor with it take the time or money to defend a lawsuit filed against the company and the insured.
Having general liability insurance protects the policyholder’s property. In the event a third-parry lawsuit is lost, the insurance company pays the damages up to the policy limits. Without the liability insurance the customer’s personal property and assets would be at risk.
General liability coverage does not come with an automatic deductible. Most plans do not have one, however, some companies offer their customers the choice as to whether or not to have a deductible applied to the plan. A higher deductible typically reduces the cost of the coverage.