What is Liability Insurance?

Liability insurance is a contract between an individual and an insurance company. This agreement is carried by an individual (policyholder) to pay any losses or damages that a third party may suffer due to the action of the policyholder. Automobile owners are required to have liability insurance on their auto policies in most states. Once damage occurs, whether property damage, bodily injury or something else, a claim must be filed with the insurance company. If the claim is approved, the insurance company will pay damages to the third party on behalf of the policyholder.

Most people have comprehensive general-liability insurance (CGL). This type of insurance covers a broad range of liability, such as property damage and personal injury. Similarly, some individuals may carry accident-based insurance, or occurrence-based liability insurance. This type of insurance policy also covers property damage and/or personal injuries. The policy goes into effect if an accident occurs.

It’s important to read all of your insurance policies carefully, as policies can vary significantly, and exclusions and restrictions may apply. You may be expecting your insurance policy to cover something but later find out it doesn’t because you didn’t read the fine print.

Who (and What) is Usually Covered by Automobile Liability Insurance?

Generally, automobile liability insurance covers a motor vehicle accident that occurs during the operation or upkeep of the vehicle listed in the policy. The insurance company agrees to pay for any of the policyholder’s liabilities that arise from an accident that meet the criteria in the insurance contract. Generally, the criteria will be use or maintenance of the vehicle.

Depending on the type of liability insurance you have and the specific wording in your policy, the criteria could vary. If the automobile is in an accident and it is not during the operation of the vehicle or during maintenance, the accident will usually be covered under the policy if you can show that there is a connection between the automobile and the accident. If the vehicle had not been present, the accident would not have occurred. For example, if the car had not been parked in the parking lot the other car would not have been able to hit it and cause damage to the vehicle.

There should be a “covered persons” section of your liability insurance policy. Look at that section to determine who will be covered under your policy. In general, the vehicle’s owner will be covered, as well as the owner’s family members, employees, guests and passengers of the insured. However, if the passenger in the vehicle is not a guest — meaning present in the car without permission — they may not be covered for injuries under the owner’s liability insurance. The purpose of liability insurance is also to protect the insured against claims from third parties. Therefore, the insurance policy should cover claims from insured third-parties against the policyholder. Such claims may be from an accident causing property damage or personal injury arising out of use or maintenance of the vehicle covered by the insured’s automobile liability insurance policy.

Have a question about liability insurance in South Carolina? If so, Call 800-868-2110 or contact us online to set up your free consultation.