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Individual Liability Insurance (Part 1 of 2)

by Julie Ngo


Why Individual Liability Insurance?

The risk of legal liability is a fact of modern life. It is perhaps the largest financial risk most individuals face. Common incidents such as an automobile accident or a neighbor’s child slipping on the kitchen floor can result in lawsuits, with damage awards of enormous size. Without liability insurance, most individuals and families could be faced with a financial disaster.

Further, state law may require liability insurance. For example, some states have compulsory auto liability insurance laws, requiring auto owners to maintain automobile liability insurance as a condition of licensing or use on public roadways. Other states require auto owners to show financial responsibility after an accident.


Sources of Individual Liability Insurance

Liability insurance is designed to cover an insured for acts of negligence that create a legal obligation to a third party. Such liability can have its source in any part of an individual’s life. For many individuals, liability insurance is acquired as part of the package policies purchased to protect major assets such as home, automobile or watercraft. Typical 1 provide the following liability coverage.


Homeowners 2 insurance: Liability coverage under a homeowner’s policy is provided in one of three sections:

  • Personal liability: These are payments the insured is legally obligated to make because of bodily injury or property damage.
  • Medical payments to others: These are medical expenses of injured third parties.
  • Additional coverages: These cover certain expenses incurred by the insured in the event of bodily injury or property damage.


Automobile insurance: Liability coverage under an automobile policy is provided in one of two sections:

  • Automobile liability: These are payments the insured is legally obligated to make because of bodily injury or property damage due to an auto accident.
  • Medical payments: These are medical or funeral expenses payable because of bodily injury.

Watercraft liability insurance: Liability protection under a watercraft policy is typically provided    in the protection and indemnity (P&I) section. P&I include coverage for the following:

  • Bodily injury – These are payments the insured is required to make for pain and suffering, disfigurement, loss of mobility, or actual medical costs.
  • Property damage – Covers damage or destruction of someone else’s property, including loss of use. Depending on the policy, additional coverage may be available for excess medical payments, longshoremen’s and harbor worker’s compensation, Jones Act and damage to wharfs and piers.


1 The specific coverage and terms of a policy will vary fromcompany to company and from state to state.

2 The liability coverage usually provided under a renter’s or a condominium unit owner’s policy is similar to that provided in a   homeowner’s policy.

Julie Ngo is a State Farm Insurance Agent located at 28410 Old Town Front Street in Temecula. She can be reached at (951) 695-2625.