How Does Liability Coverage Work?

Liability coverage is a broad-spectrum insurance product designed to protect property owners, corporations, licensed professionals, and motor vehicle drivers from the expenses of negligence claims against them. Liability insurance pays those injured parties pursuing financial compensation for bodily injury and/or property damages.

It might be safe to say there are at least as many scenarios about the particulars of liability insurance coverage as there are types of personal injury. When accident victims understand the sources and types of potential financial compensation, they have some control over unfortunate and unexpected situations knowledge is power.

Accident victims seeking compensation from a business owner, homeowner, property manager, government entity, or motorist may benefit significantly if an experienced personal injury lawyer is a part of the recovery process. Theories of liability are complex issues, and personal injury laws and regulations are state-specific, as are the statutes of limitations.

Generally, Who Carries Liability Coverage

Accidents happen. Liability coverage is the first line of defense for the personal assets of those who harm another because of poor judgment or negligence. General liability insurance policies are in place to cover claims of bodily injury or property damage.

A skilled personal injury attorney can investigate and navigate any liability insurance policies in place to fund claims for those injured:

• On commercial or residential property
• Because of dangerous or unsafe products
• In a motor vehicle accident

Umbrella Insurance

An “umbrella” liability policy might cover some scenarios. Although not everyone needs additional coverage protection, those with significant liquid assets and/or multiple investment properties are likely to have umbrella coverage. Homeowners who have swimming pools and trampolines on their property frequently carry additional liability coverage.

Types of Liability Insurance Claims

With the possible exception of intentional damage and criminal acts, a liability insurance policy protects the purchaser from claims against them for injury and damage. The maximum amount of coverage (also known as the policy limit) per claim or policy term can vary substantially. When dealing with the resolution of a personal injury, the settlement amount links to the limits of the liability policy covering the damages.

The old saying, “You get what you pay for” holds true regarding insurance coverage. Those willing and able to afford high premiums will have better protection. While individual policies that protect homeowners’ assets when a visitor is injured on their property are likely to have minimal coverage, a large hotel chain or department store will have a great deal more.

Premises liability

Any building or dwelling can be dangerous when not properly maintained. A hazardous condition risks harming unsuspecting guests, visitors, customers, clients, or patrons in a home, business, public gathering space, or recreational area.

A premises liability insurance policy may fund compensation for accidents stemming from:

• Falls caused by damaged walkways, stairs, or broken pavement
• Slippery walkways
• Falling debris at or near a construction site
• Potholes in parking lots
• Injury due to a lack of security or proper lighting
• Inadequate maintenance of the facility or equipment
• Burns from faulty wiring
• Torn or worn carpet
• Animal bites
• Food-borne illness
• Damage due to a failure to meet ADA standards
• Toxic mold
• Defective elevators or escalators
• Building code violations
• Exposure to dangerous materials
• Fire safety code violations
• Violation of OSHA requirements

Those staying at a hotel, motel, bed and breakfast, or vacation rental, expect safety and comfort. Visitors to an amusement park do not expect to receive an injury from faulty or unsecured equipment, pedestrians near a construction site have a right to expect caution signs, and municipal workers and first responders expect the necessary safety equipment. When harm comes from wrongdoing or negligence, a personal injury lawyer can help an accident victim and his or her family seek financial justice.

Product Liability

Regarding product liability establishing fault is taken out of the equation. If a product causes harm when used correctly and according to printed instructions, the injured party can legally seek compensation. Consumers should be able to trust that the products they purchase are safe. Manufacturers and distributors and retailers may be held responsible for injuries caused by dangerous products, unsafe medications, and tainted food products.

The Consumer Product Safety Commission has an interactive website detailing all recalled products and highlighting the hazards. Injured parties can file a personal injury claim against a manufacturer’s product liability insurance for harm caused by a poor design, a particular defect, or missing or incomplete instructions and warning labels.

Design Defects, Manufacturing Defects, and Insufficient Warning

Common examples of product liability issues include:

• Children’s products with choking hazards
• Power tools with no safety guards
• Electrical appliances that overheat
• Electrical appliances that shock the user
• Highly flammable infant’s and children’s clothing
• Structurally unstable products, such as a chest of drawers or table that can topple over
• Structurally unstable furniture
• Unsafe child car seats
• Baby cribs that allow an infant’s head to get stuck
• Bicycle and motorcycle helmets that do not withstand even mild impact
• Mechanical defects on motor vehicles
• Problems with the assembly of a product
• Faulty electrical circuits
• A failure to sufficiently warn consumers of known risks
• Inadequate instructions

Self-Insured Business

When a business self-insures, they take on all the risk rather than paying expensive annual premiums for injury claims. A self-insured company may be harder to deal with than a commercial insurance carrier. Financial recovery will likely be a difficult process. The business is not inclined to help the injured customer. They have everything to lose.

Valuable evidence is likely to disappear. Any documentation a victim can gather at the point of injury can be important. Photographs, date and time-stamped, may give credibility to a claim. Pictures of blocked aisles or wet and slippery floors indicate unsafe practices. A self-insured business is more likely to avoid taking responsibility for an injury-causing incident than a corporation covered under a pre-paid liability insurance premium.

Accident victims are under no obligation to give a recorded statement to anyone at the time of injury. For example, when a slip and fall injury happens at a grocery store, the market’s manager will notify the insurance carrier, who will (you can count on it) contact the victim. But, when an accident happens in a self-insured store like Walmart, the managers are at your side immediately. They will take every opportunity to intimidate a victim and use every trick in the book to mitigate their store’s losses. Having experienced legal representation matters in complicated and expensive personal injury cases,

Auto Liability

Driving in California is inherently dangerous. It is probably no surprise that nationally, California ranks second in motor vehicle fatalities. State law requires vehicle owners to maintain liability insurance. This mandated insurance product only provides financial compensation to the injured party up to the policy’s limits. The minimum liability coverage required by state law is relatively low.

The minimum liability insurance policy will cover:

• $15,000 for the death or bodily injury of any one person
• $30,000 total for the death or bodily liability of all other people hurt in the accident
• $5,000 for property damage

This is not significant or sufficient financial reimbursement. One of the common injuries sustained in a serious motor vehicle accident is a traumatic brain injury. The lifetime cost of treatment for this type of head injury can reach $3 million.

Catastrophic Injuries From Premises Liability, Product Liability, and Auto Accidents

Spinal cord injuries often result in permanent physical disability for an accident victim. Paralysis means a lifetime of dependence on a wheelchair and caregivers. The cost of care for such a catastrophic injury can be financially impossible for a family. Severe injuries challenge the limits of insurance coverage. Legal experience and intervention are a victim’s best option for adequate compensation for long-term, disfiguring, and debilitating conditions such as second and third-degree burns, head trauma, internal organ damage, and amputations.

Liability Coverage Can Compensate A Victim For Recoverable Damages

Accident victims can legally seek compensation for their losses from the person or entity found to be at fault or liable for the incident. When these legally compensable damages have a dollar value, determining a fair financial settlement is relatively simple. The negligent party pays these economic damages through a claim on their liability insurance policy. These actual financial losses include:

Medically related expenses

A plaintiff is generally able to seek restitution for all medical expenses, such as:

• Ambulance charges
• Emergency room services
• Inpatient hospital bills
• Treating physician’s fees
• Radiology costs
• Lab charges
• Medication
• Surgical fees
• Pain management treatment
• Adaptive equipment
• Home health nursing services
• Physical therapy
• Home modifications
• Mental health services
• Transportation costs to and from medical treatment

Lost income

Liability insurance carriers must consider the value of lost wages in a financial settlement. Proof of an accident victim’s present salary package is usually required. You may calculate this using tax statements, W-2(s), an employer’s salary verification form, pay stubs, a copy of the victim’s benefits package, and business and personal banking records.

When the injuries result in long-term or permanent disability, determining the monetary value of future lost income will depend on the accident victim’s age, health status, the type of injury, current occupation, educational background, and the probability the injured person will return to work or their chosen profession.

Personal property

In addition to vehicle damage. Liability insurance claims adjusters should consider personal property losses such as clothing, jewelry, leather goods, and electronics. Insurance carriers require substantial evidence and documentation to validate and approve economic losses. A personal injury lawyer has the experience and resources necessary to handle the complexities of a claim against an insurance company.

Non-economic damages

Intangible harm is as debilitating as physical pain. Pain and suffering, emotional distress, irreparable changes to the family dynamic, and a loss of enjoyment in daily activities are all well-documented consequences of a personal injury. Although slightly more difficult to quantify, they are nonetheless compensable. Historically, the injury’s severity, the projected recovery length, and the possibility of extended treatment validate the pain and suffering.

Wrongful death damages

Qualifying family members may seek wrongful death damages under a liability insurance policy. In addition to funeral and burial costs, it may be possible to receive compensation for the loss of inheritance, the value of services the deceased would have provided if they lived, and the administrative costs involved in settling the estate.

What Happens if the Limits of the Liability Policy Do Not Cover Losses?

Insurance companies need not disclose policy limits in liability claims. Although every individual policy has a maximum liability limit for the insurance company, a personal injury lawyer is valuable in investigating additional potential sources of legal compensation.

Often multiple parties bear some responsibility for the incident. Filing a lawsuit for damages above policy limits may be beneficial in cases when the injuries are catastrophic. A personal injury attorney can help an injured accident victim determine the total value of available compensation from all sources.

Personal injury attorneys help injured families navigate the complexities of liability insurance claims by:

• Thoroughly identifying and investigating all possible sources of compensation
• Reviewing the terms and limitations of all pertinent liability policies
• Managing deadlines
• Handling insurance negotiations

If you or a loved one is dealing with the aftermath of an injury-causing accident, you need full and fair financial compensation and legal counsel.

Schedule A Free Consultation