What Is Public Liability Insurance Used For?
Public liability insurance serves as protection against risk of claims made against a business or corporate entity. The insurance company will investigate and evaluate any potential claim made against the business's liability policy. If the business is found at fault for the claim, the insurance company will pay the value of the claim up to the limit of liability coverage. Such claims may include property damage and bodily injury. If a business is uninsured, it will be responsible for investigating and paying any potential claim out of its own pocket.
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Public Liability Insurance Coverage
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Under a general liability insurance policy, there are several kinds of coverage that insure against liability claims made against a business. Bodily injury coverage insures against someone who becomes injured on the business's premises. Property damage coverage insures against damage caused to someone else's personal property. Personal injury coverage insures against accusations against the business for libel and slander.
Public Liability Insurance Policy Exclusions
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Policy exclusions are insurance policy terms that preclude coverage for a loss. For example, if an employee intentionally causes damage to someone else, such conduct is not a covered loss. In conjunction with intentional conduct, punitive damages are not covered under a public liability insurance policy. Punitive damages are awarded at trial if any action on the part of the business is intentional, willful, or malicious in nature in bringing about the damage.
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Examples of Property Damage Claims
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If an electrician performs wire repair inside a home and a fire ensues, the resulting damage becomes a property damage claim under the electrician's public liability insurance policy. Likewise, if the same electrician operates his vehicle en route to another job and causes a car accident, the resulting damage to the other vehicle also becomes a property damage claim under the electrician's public liability insurance policy.
Examples of Bodily Injury Claims
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An automobile repair shop performs repairs to a vehicle, and subsequently, the vehicle becomes involved in a car accident causing an injury to an occupant of the other vehicle. A claim for bodily injury may be presented under the repair shop's public liability insurance policy if it is proven the repairs were faulty and caused the collision. Likewise, if the automobile repair shop accidentally leaves a tool on the floor and a customer is invited into the work area and trips over the tool, injuring an ankle, a bodily injury claim may be presented under the repair shop's public liability insurance policy.
Legal Fees, Costs, and Judgments
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If a legal action is filed in a court of law against a business, the business's insurance company provides an attorney on behalf of the business to defend the lawsuit and pays all legal fees and associated expenses. In addition, the insurance company pays any settlement, award, or judgment entered against the business up to the limit of liability coverage. Conversely, if a business is uninsured, all legal costs and any resulting judgment are the responsibility of the business.
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