Liability insurance offers protection to individuals and businesses from risk which they may be held legally liable to or sued for malpractice, negligence or injury. This insurance policy offers protection to insured from legal payouts and costs for which he is deemed responsible. However, contractual liabilities and intentional damage are normally not covered as part of this policy.
If a product manufacturing company sells a product which causes damage to other people or products, then it may be sued for the loss or damage caused by its product. But if the company has procured a liability insurance policy, then the loss or legal costs will be covered by the insurance provider.
This insurance is most suited for doctors, hospitals or business owners. Liability insurance has been covered under general insurance policies. In India, the scope of liability insurance is defined by the Public Liability Act of 1991.
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