General liability insurance provides the security for an individual or businesses against lawsuit losses. Business liability insurance provides the protection for your business against legal claims, which are filled by any person who does not like your service. In general, business is associated with many people, either they are general public, workers or customer.
The reasons for opting liability insurance, are
1. If a business man is offering service to the public, like hospital and a person dies due to the negligence of a doctor treatment, then the patient files a claim against hospital management. In such cases the hospital management is legally responsible for the mistake. If the management has professional liability insurance then the person dependents receive death benefits. Here the management gets some relief from the court case.
2. If a business is offering some financial advise service to other companies. Due to the director or manager’s wrong decision, the other company gets heavy losses, then the other company registers a claim against the advising company.
For example: If a person gets a loss of $560000, due to the wrong advice from his client’s business director. In such cases, the person files a legal claim against the business. Then the management is under the court case risk. If the management has directors and officers liability insurance, then the insurance company pays the lost amount to the person. With the help of director and officer liability insurance the management can close the case as early as possible.
3. If a manufacturing company gets a claim against producing a defective product, then the company solves the claim with the help of product liability insurance.
For example: If a person dies by taking a defective product, which is a result of workers negligence, then the management faces claims for the death of the person. If the management has product liability insurance. Product liability insurance provides the benefits against the claims, which are related to the product quality.
Due to the above reasons, liability insurance is advised for businesses.
