Tort insurance acts as a protective financial shield against the unpredictable legal threats and perils that may arise. In other words, this type of insurance serves as a safety net against the financial consequences of torts or civil wrongs. Whether is defamation claims from social media posts, a slip-and-fall accident at your business or workplace, or damage to your property by pets, tort insurance is there to protect you and cover the associated costs of legal judgments, defense, or settlements. In this guide, we will be learning more about tort insurance, how it works, what it covers, and how to get a policy.
What is Tort Insurance?
Tort insurance is also known as liability insurance and it is a form of coverage created to offer protection to businesses and individuals against legal liabilities that may come from torts or civil wrongs. This can include personal injury, bodily injury, and property damage claims. Thus, this form of insurance coverage offers financial protection by covering settlement costs, court-ordered damages, and legal expenses in case of a lawsuit.
How Does It Work?
Tort insurance works using the concept of indemnification. This is a principle where the insurance provider agrees to reimburse the policyholder for covered perils due to legal liabilities. However, the insured will need to pay premiums to the insurance company in exchange for this protection type. In the event of a covered peril, the policyholder will file a claim to notify the insurance company which will be responsible for investigating the claim, offering the legal delegation, and covering the repair or replacement cost up to the limit of the policy.
What Does Tort Insurance Cover?
Although the coverage of a tort insurance policy is determined by the insurance company, here is what tort insurance typically covers:
- Bodily injury.
- Legal defense costs.
- Property damage.
- Personal injury.
- Defamation.
- Settlements or judgments.
- Invasion of privacy.
What Does It Not Cover?
Even though tort insurance provides a wide range of liabilities, there are certain exclusions that might be applied. They include:
- Pollution or environmental damages.
- Intentional acts.
- Contractual liabilities.
- Professional errors or omissions.
- Employment-related claims.
- Illegal acts.
Who Needs a Policy?
You might want to consider purchasing a tort insurance policy if you are:
- Property owners.
- Contractors and Service Providers.
- Doctors.
- Vehicle Owners.
- Consultants.
- Event Organizers.
- Nonprofit Organizations.
- Lawyers.
- Landlords.
- Business owners.
And anyone working jobs that are prone to liability risks in their field.
How Much Does Tort Insurance Cost?
The cost of purchasing a tort insurance policy is affected by various factors. Some of them include the following:
- Coverage type.
- Coverage limits.
- Additional endorsements.
- Jurisdictional legal environment.
- Deductibles.
- Claim history.
- Business size.
- Risk profile.
- Industry type.
- Location.
- Insurance company or provider.
Meanwhile, the premium cost for this form of insurance is usually from a few hundred to several thousand dollars per year.
How To Get Tort Insurance
If you are new to the world of insurance, here is a step-by-step guide you can use to get tort insurance:
Evaluate Your Liability Risks
Before getting tort insurance, you need to find out the possible liability risks and consider factors like property ownership, occupation, communication with third parties, and business activities.
Shop Around for Insurance Companies
There are various insurance companies that offer tort insurance and you can find them considering factors like the width of the coverage options, financial stability, customer service, and reputation.
Get Different Policies
While you shop around for insurance providers, gather their quotes and compare their pricing and coverage. To make sure the policy meets your needs, enter your desired coverage limits and liability risks.
Review Policy Options
Check the quote options of every insurance company carefully. Moreover, pay more attention to their additional riders or endorsements, coverage limits, deductibles, and exclusions.
Complete the Application Process:
Personalize your policy and complete the application procedure with the insurance provider you choose. Make sure that all the information you provide is correct and accurate.
FAQs
How does tort insurance differ from professional liability insurance?
Tort insurance is also known as general liability insurance and it provides coverage for different civil acts and wrongs like personal injury, bodily injury, and property damage. On the other hand, professional liability insurance pays more attention to errors and negligence in the professional field. In other words, it covers lawyers and doctors.
Can I enhance my tort insurance coverage?
Certainly, policyholders have the chance to increase their tort coverage by insurance companies by adding additional riders or endorsements. These riders enable them to customize their coverage to meet certain needs like employment practices liability, product liability, or cyber liability insurance. Speak with your insurance company if you need additional coverage.
What should I do if I’m sued and need to claim under my tort insurance?
If you get sued and need to file a claim with your tort insurance provider, reach out to your insurance company immediately. They will send a claims adjuster to investigate the incident and if necessary, they will offer legal representation. During the claim process, you will need to provide the necessary documents.
