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Liability Insurance For Auto, Home, Business Made Easy

Liability Insurance Coverage In Texas

Liability Insurance primarily protects against claims of loss or damage for which an insured might have to compensate another party.

It differs from homeowners insurance, renter’s insurance, auto insurance, boat insurance, motorcycle insurance or business insurance in as much as Liability Insurance (even though it may be part of the above mentioned ‘types’ of insurance coverage policies) covers losses resulting from acts or omissions that are legally deemed to be negligent and that result in damage to the person, or legitimate interests of others.

Liability Insurance in America

Historically, it was principally the introduction of the Automobile that spurred the rapid growth of this form of insurance; liability insurance now extends to a great many activities in addition to driving, including (but not limited to) malpractice insurance for doctors and other professionals, marine liability for boat owners and operators, comprehensive personal liability for home owners, as well as product liability claims for manufacturers of consumer goods, not to mention business injury claims, inclusive property damage coverage and advertising claims.

Let’s take a look at how most people might think about Liability Insurance in three of its most common forms and how it affects you:

What is the definition of Auto Liability Insurance in Texas?

Texas law requires people who drive in Texas to be able to pay for the auto accidents they cause. Most drivers meet this requirement by buying auto liability insurance. The ‘Texas Financial Responsibility Law’ requires minimum auto liability insurance coverage.

Special Note: Texas defines minimum auto liability insurance coverage as part of its Financial Responsibility Law to include payments to repair or replace the other driver’s car and pays other people’s medical expenses if you as a driver are neglegent and cause an ‘at-fault-accident’. It does not pay to repair or replace your car or for your injuries.

The minimum coverage amounts required by the states financial responsibility law is $30,000 for each injured person, up to a total of $60,000 per accident, and $25,000 for property damage per accident.

Liability coverage pays for your legal responsibility to others for bodily injury or property damage it does not pay for your injuries or your car.

1. Bodily Injury: This coverage applies to injuries that you, the designated driver or policyholder cause to someone else.

2. Property Damage: This coverage pays for damage you (or someone driving your car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hits.

Remember, an auto insurance policy can have several different major kinds of coverages. Most states require you to buy some, but not all, of these coverages (Texas requires state mandated liability insurance limits). If you're financing a car, your lender may also have requirements. Most auto policies are either for six months or for one year, so keep that in mind when reviewing your premium payment.

It’s very important to have enough auto insurance, because if you are at-fault in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.

What is Liability Insurance in a Homeowners Insurance Policy?

Generally, Homeowners insurance provides financial protection against disasters (causes of loss). A standard policy insures your dwelling and the things you keep in it.

Homeowners insurance is typically a package policy. This means that it can cover both damage to your property and your liability responsibility, (your legal responsibility to others).

Homeowners Liability protects you against claims or suits (your legal responsibility) brought against you for damages because of bodily injury or property damage to others that you or members of your family living in your household cause to other people. This includes injuries caused by household pets on or off your property.

1. It covers you against lawsuits, and court awards for bodily injury or property damage up to the limits of your policy coverage.

2. However, if you, family members living with you or your pets injure you or family members living with you, you are not covered.

3. You may also have coverage not just in your home, but elsewhere in the world.

4. This portion of policy coverage may also include Medical Payments to others not found elsewhere in your policy that can range from $1,000 to $5,000.  This is very important coverage in as much as it may take care of an individual’s emergency room treatment and/or medical bills, and can help to stave off a costly lawsuit. 

Special Note: Property Damage to others (a third party) is typically covered for $250 to $500 in a homeowners liability policy without proof of negligence.

Home Insurance or homeowners insurance can cover most damage caused by a covered disaster but there are exceptions. The most significant are damage caused by floods and poor maintenance. You must buy a separate policy for flood insurance in Texas. Maintenance-related problems are the homeowners' responsibility.

What is Liability Insurance in Business Insurance?

Owning and operating a business comes with plenty of responsibility and accountability. Even if you operate with the utmost care and provide the best quality and service, a client can perceive you did them wrong.

Is your business protected with liability insurance? Learn what all successful business owners should know about this important coverage.

For example, a common misconception of a Limited Liability Company (LLC) or an Incorporated Company is that a business owner is protected from personal liability and liability insurance is not necessary.

You can be found “personally liable” if:
  • You have signed a personal guarantee for a loan personally
  • You have injured someone
  • You have acted in an irresponsible manner
  • You do not operate your business as a separate entity
Business liability insurance protects you in the event of a lawsuit brought against you for personal injury or property damages. It can usually cover the damages from that lawsuit along with legal costs up to the limits of coverage in your policy.

Depending on your business needs, liability insurance can be purchased in many forms.

Here are some of the most common forms:

1. Commercial General Liability Insurance: Known as CGL (Commercial General Liability) insurance, protects business owners against claims of liability for bodily injury, property damage, and personal/advertising injury (slander and false advertising). CGL insurance is typically used by medium to large businesses and depending on the type of business you own and your business situation, a CGL may be the only type of business liability insurance your business may need. You should carefully review liability coverage and its endorsements to know exactly what policy type is necessary for your business and what it does and doesn’t cover. Review these important factors with your agent; ask questions about coverages and policy limits. A good agent will review all your liability needs with you.

2. A Business Owners Policy (BOP) has been compared to a homeowners policy for business. A BOP has become a very popular form of insurance for small business into a standard package at a premium that is generally less than would be required to purchase these coverages separately.

A typical BOP policy can include: Property insurance covers buildings, equipment and inventory Business interruption insurance covers losses for reduced production (for a while) or shut operations.

It can provide money to offset lost profits or to pay continuing expenses (typically for up to a year for insured losses) Casualty or liability protection covers harm done by the employees or products to other people or their property.

Crime insurance covers loss of money or securities resulting from burglaries or robberies or destruction as well as losses from employee theft or embezzlement.

Liability insurance covers lawsuits arising from accidents (as when someone trips and falls on your business’s property) or when you sell a product that damages the customer’s property or you are accused of offenses such as slander, copyright or invasion of privacy.

Vehicle coverage for rented or borrowed vehicles.

Most of the coverages that are needed by small to medium sized businesses, with the exception of ‘Commercial Auto Insurance’ and ‘Workers Compensation’ are generally included in a BOP; but there are a number of other coverages such as flood insurance or earthquake insurance or specialized liabilities that are generally not included in a BOP. Some of these may be available separately for extra premium(s). Always review your specific business insurance needs with your insurance agent.
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Disclaimer: Content and illustrations represented and provided here-in are for informational purposes only. This information should not be misconstrued to be considered Insurance or Binder Coverage for Insurance. Always consult a licensed insurance agent in the state of Texas for specific insurance coverage types and needs analysis as insurance policies in Texas vary.

Sources used to gather content for this Article and all Articles provided in this Series include:

The Costlow Insurance Group, Inc. / www.costlowinsurance.com
a. The Insurance Information Institute / http://www.iii.org
b. The Texas Department of Insurance / http://www.tdi.state.tx.us

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