What Is Liability Insurance? |The Hartford

Q: How Does Liability Insurance Work?

Liability insurance policies help protect you or your business from a covered loss. When a loss occurs during your policy period, you file a claim with your insurance company. If it’s a covered cause of loss, your liability policy helps cover your claims costs.

Q: Do I Need Liability Insurance?

Nearly all states require auto insurance, which includes liability insurance to protect you if you injure another party or cause property damage in an accident. Mortgage lenders often require liability coverage in a homeowners insurance policy, and some landlords may require liability insurance in a renters insurance policy.

Q: How Much Liability Insurance Do I Need?

When selecting your coverage limits, determine what assets you want to protect, such as your home, savings, and investments. It is recommended to select a coverage limit that matches or exceeds your net worth to ensure you have enough coverage to protect your assets if someone sues you.

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What Is Liability Insurance Coverage?

Liability insurance helps protect you financially if you’re found legally responsible for property damage or personal injury to a third party. This liability insurance coverage is part of most home, auto and business insurance packages and customized for different situations.

Business Liability Insurance

There are different types of insurance coverages that you can get to help protect your business from liability claims. Common business liability insurance coverages include:

General liability insurance to help cover claims alleging that your business caused bodily injury or property damage to someone else or their belongings.
Professional liability insurance to help cover your legal costs and judgments made against you if a client sues your business for any mistakes made during professional services your business provides. This coverage is also known as errors and omissions insurance.
Data breach insurance, which helps you respond to a breach if personally identifiable information is stolen from your business. Some insurers may refer to this coverage as cyber liability insurance.
Commercial umbrella insurance to help cover the costs that exceed your underlying liability coverage limits.
Commercial auto insurance to help protect you and your employees on the road if you drive a company-owned car for business. It can help cover someone else's property damage and injuries if you cause an accident.

Personal Liability Insurance

You may want to consider coverage to help protect you in personal situations, including:

Personal liability insurance to help protect you if someone gets hurt while on your property. It can also help cover you if you’re responsible for damaging another person’s property. This coverage is part of your homeowners or renters insurance policy.
Bodily injury liability insurance to help pay for medical expenses resulting from a car accident that you caused.
Property damage liability coverage to help pay for repair damages from an accident you caused or that you’re found responsible for.

male small business owner protected by knowing what is liability insurance coverage

How Does Liability Insurance Work?

Depending on the type you have, a liability insurance policy helps protect you or your business from a covered loss. These policies work when:

A loss occurs during your policy period
You file a claim with your insurance company
You have a covered cause of loss

It’s a good idea to check each liability insurance policy you have to make sure you understand how it works. Policies may have exclusions (things that are not covered) and list the types of losses they won’t cover.

Liability Insurance Minimums and Requirements

Your state may have minimum liability insurance requirements for car insurance policies. State car insurance laws vary, but you’ll likely need to have minimum coverage for:

Bodily injury liability
Property damage liability

For other types of liability insurance, several factors can impact your coverage needs. These include:

Your claims history
Your location
The type of business you have
How many years you’ve been in business

You can work with an insurance agent or specialist to better understand your local laws. This can help you make sure that your coverage complies with state rules.

Liability Insurance Restrictions and Exceptions

Liability insurance helps cover third-party claims of property damage or bodily injury. These policies don’t provide coverage for the policyholder. For example:

Bodily injury liability coverage won’t help cover your medical bills if you get hurt in a car accident that you caused. You’ll need personal injury protection (PIP), also known as no-fault insurance, to protect you in these situations.¹
Property damage liability insurance won’t help pay to repair your car if it’s damaged in an at-fault accident. Collision coverage can help you with this kind of claim.
General liability insurance won’t help a business owner if their employees get hurt on the job. It also won’t help cover repair costs if business property they own gets damaged. Instead, business owners will need workers’ compensation insurance and commercial property insurance, respectively.

Like most other types of insurance, your liability policies don’t cover intentional acts or criminal actions. It’s important to review your insurance policy on a regular basis. You'll want to make sure you understand the exclusions and limitations of your policy.

female and male small business owners protected by liability insurance from The Hartford

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We’re a property and casualty insurance company with more than 200 years of experience. Whether you need business insurance or personal liability insurance, our specialists can help get you the right type of insurance. Get a liability insurance quote today.

Frequently Asked Questions About Liability Insurance

How Does Liability Insurance Work?

Depending on the type you have, a liability insurance policy helps protect you or your business from a covered loss. These policies work when:

A loss occurs during your policy period
You file a claim with your insurance company
You have a covered cause of loss

Do I Need Liability Insurance?

Nearly all states require that you have auto insurance, which includes liability insurance. This protects you if you injure another party or cause property damage in an accident. Not all states require you to have personal liability coverage, which protects you if someone is injured on your land or property. However, mortgage lenders often require liability coverage in a homeowners insurance policy. In addition, some landlords may also require liability insurance in a renters insurance policy. You may consider having liability insurance coverage to help protect you and your assets against unexpected costly claims.

How Much Liability Insurance Do I Need?

When selecting your coverage limits, you should determine what assets you want to protect, such as your home, savings and investments. It is recommended that you select a coverage limit for your policy that matches or exceeds your net worth so you have enough coverage to protect your assets if someone sues you.