Liability cases will almost always factor in insurance. Insurance is an
equitable exchange between the risk of a loss and payment. We can see
this exchange most commonly in health insurance, where medical costs can
be covered by a particular insurance plan. There are other kinds of insurance
as well; a common practice today is getting insurance for items and property.
Insurances can be paid monthly, semi-annually, or annually, depending
the kind of plan you get. There are also cases wherein insurance won’t
be able to cover the costs for the damage incurred.
What is liability insurance?
Liability insurance is a special kind of insurance that protects a person
from liabilities resulting from lawsuits and other claims. If the person
is sued for a claim that is covered by the insurance policy, the insurance
will pay the compensation required in the settlement in or out of court.
Liability insurers have three major roles or duties: 1) to defend, 2)
to indemnify, and 3) to settle a claim reasonably.
3 liability insurance duties
The duty to defend starts when the insured is sued; therefore the role
of the insurer to defend against the claim is activated. The insured does
this by sending a copy of the claim or complaint along with a cover letter
to the insurer. It after the claim has been reviewed that the insurer
can 1) no coverage, 2) defend against the claim, or 3) refuse the case
entirely. There is a concept called ‘reservation of rights’
that can be used by the insurer if it decides to defend the insurer. This
concept means that in the case that it is discovered through the investigation
that the claim cannot be covered by the insurer; they can back out of the case.
The duty to indemnify is simple; it means that the insurer will pay the
entirety of the claim for which the insurer is liable for, up to a policy
limit of course. The last duty, to settle means the claim is taken to
court and a reasonable settlement is reached. If the insured wins the
case, that means he or she is not held liable for anything. If lost, the
insurer will have to pay an amount within the policy limits. If the insurer
breaks any of these duties, the organization or company can be charged
for the torn of insurance bad faith as well as breach of contract.
Kinds of liability insurance
Insurance policies under liability insurance fall under three main categories:
product liability, and employer liability. Public liability is usually on the shoulders
of industrial or commercial businesses whose activities have the potential
or risk in harming third parties – members of the public. Product
liability mostly involves manufacturers of products that are sold or sent
out for mass consumption. Employer liability is fairly new, with new policies
designed to protect the employee from the risk of injuries acquired during
the course of his or her employment.
For more information regarding liability claims, cases, and insurance,
give us a call at Kyle Law Firm to set up a consultation meeting.