Types of Policy

The four major liability insurance policies are as follows:

1. Motor Vehicle Liability

By law, you must insure your legal liability arising from the use of vehicles on the road. Liability insurance for vehicles costs far less than full coverage, as it will only pay for property damage and medical expenses due to a 3rd party, while full coverage insurance must also pay for your vehicle and medical expenses.

2. Employers' Liability

Employers' liability (EL) cover enables businesses to meet the costs of legal fees and compensation for employees who are injured or made ill at work through the fault of the employer. By law, all employers must insure against their legal liability for injury, disease or death to employees sustained by them and arising from their employment.

In many states, the insurers are prohibited from including conditions within their policies that seek to impose any unreasonable conditions. Many of the public and product liability risks are often covered together under a general liability (or "umbrella") policy. These risks may include bodily injury or property damage caused by direct or indirect actions of the insured.

While this type of policy sounds like it is designed to protect the employee, (which it does to some degree) it is actually intended to protect the employer from cases that the employee might sue the company.

3. Public Liability

Public liability (PL) insurance covers you in the event that a claim is brought against you by a third party (for example, members of the public, visitors, trespassers or sub-contractors) for death, bodily injury or damage to their property that occurs as a result of your business activities. It also covers legal fees, costs and expenses such as representation at any coroner's inquest, fatal accident inquiry or other court hearing because of an accident.

It varies from state to state as to whether public liability insurance have been made compulsory by law.

4. Product Liability

If you make, repair or sell products, you could be held legally liable for damage or injury arising from defects in their design or manufacture - even if you have not been negligent. Product liability insurance will cover you in these circumstances, up to a maximum amount each year.