The insurance cover is essential if a person runs a business that makes them prone to frequent subject of lawsuits and claims. For example, drug manufacturers are often subjected to lawsuits so they can benefit from this type of insurance.
Insurance cover helps an organization or person to defend themselves against lawsuits. Sometimes, the legal costs are too high and make it difficult for an organization and person to defend themselves without such a cover.
Liability insurance cover becomes even more helpful if the person or an organization is made to bear the expense of third party or the party who sue them. This doubles the legal cost and the person or organization can be helped by liability insurance cover.
Liability insurance cover also helps a person or an organization to indemnify, meaning they can be able to pay all the claims upfront by the third party up to the limit that has been set in the insurance policy.
The person or organization who are insured by the liability insurance are also helped to settle or clear claims of third parties. They can be an organization, a person or many people.
Liability insurance only covers third party claims or damages. Not the personal loss of the person who is insured. So be clear in the beginning when you sign for this type of insurance cover.
Liability insurance covers both, legal costs and damages, which the insured person or organization are made liable for. However, it will not cover intentional and contractual damages.
Make sure you clearly understand these difference in the beginning when you sign the contract of the insurance policy, and try to negotiate terms that will suit you more, depending on the nature of your business.