Liability Insurance: How It Protects Your Family

by | Dec 10, 2024 | Personal Insurance | 0 comments

Insurance Protection for your Family

Home insurance protects our homes. Auto insurance protects our vehicles. But both of these policy types come with a coverage type that can protect against impossible-to-predict losses: liability insurance.

Potential damage losses for home and auto policies are limited to the value of the home or car we’re insuring. While these can still be big numbers, the average loss amounts pales in comparison to the potential losses due to liability risks.

What is Liability Insurance? 

Liability refers to our financial responsibility to others. It is defined by the Insurance Bureau of Canada as being “Insurance that agrees to indemnify the insured for sums they may be required by law to pay to third parties as damages for bodily injury or damage to property. The maximum amount of insurance provided under a policy of liability insurance.”
For example, if you accidentally knock down the neighbor’s fence with your new riding mower, you become liable for the cost of repair. In this example, many people would choose to pay for the damage out of pocket rather than placing a claim.
In many other cases, the cost of repairs or financial loss to others can be much higher — especially if someone is injured. Typically, your policy can also help pay for your legal defense, often a sizeable cost on its own. 

How Do I Obtain Liability Insurance?

Most home insurance policies include coverage for personal liability risks. If you or a member of your household causes accidental damage to the property of others or unintentional injuries to others, your home insurance policy can help pay for your financial liability. 

Similarly, your auto insurance policy provides liability coverage for damage you cause to the property of others, including vehicles, signs, lamp posts, etc. Medical liability for bodily injuries caused to others is also included.

However, your coverage is governed by the coverage limits you choose and many households don’t have enough protection. This is especially true for auto policies which often default to a relatively low liability coverage limit and which have a higher risk for injury to others. There may also be some gaps in coverage if you have business-related liability risks or could face risks due to libel or slander.

The best strategy to safeguard against liability risks is to discuss your coverage needs with a licensed insurance broker. For some households, the base coverage offered by a standard home or auto policy may be enough. In other cases, it may be prudent to add expand your coverage with an umbrella policy or a business liability policy.
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A policy review offers the opportunity to better understand your risks, potential losses, and the best ways to protect against the unexpected. If you haven’t reviewed your coverage lately, contact us to schedule a time that’s convenient for you.