As I had mentioned before, the inspiration for a number of my columns has come from a customer asking a question or telling me something he or she did, and wants to know whether he or she has insurance coverage.
I was asked recently that if a person lent a travel trailer to a friend and someone became injured, could the owner be held liable. Liability is the state of being responsible for something, especially by law.
We usually don’t consider what would happen if our actions caused injury or property damage to someone. We also read or hear about car accidents, gun accidents, building collapses and numerous other accidents causing injury or damage to others.
While we all hope never to be involved in one of these events, if we are, liability insurance becomes very important.
This type of insurance protects us if we hurt someone or damage their property. It provides us with the money to reimburse someone for injuries or property damage for which we are liable. It also provides for the cost of defending us against lawsuits when we are accused of hurting someone or damaging their property.
There are two important types of liability exposures: personal and commercial. Personal liability results from the action of our daily activities. Commercial liability results when we are paid or expected to be paid for our actions.
Personal liability is provided by your car, home, boat or recreational vehicle policy. The limits or amount the policy will pay depends on the coverage you choose and should reflect the assets you own. Increased limits of personal liability, over $1 million, is best provided by a personal liability umbrella policy (PLUP).
A PLUP provides extra liability for all of your personal liability exposures. Personal injury policies also provide protection for things such as slander and false arrest, which are not found in any other type of personal liability policy.
Commercial liability policies are designed to provide protection for individuals or corporations operating a business. The size of the business is not important. The simple fact that there is money exchanged creates a commercial liability exposure.
With the increase of people working freelance from home, insurance companies have developed business-in-home policies. These policies provide liability coverage and equipment coverage for individuals working out of their home.
If your business does not qualify for this policy, you may need to purchase a general liability policy, a professional liability policy or some type of errors and omission policy.
Before I finished this column, a customer called requesting a copy of his liability policy for his utility trailer. He was planning to lend the trailer to his employer to use in his or her business. The employer wanted to make sure the utility trailer had liability insurance.
The problem is, vehicles used on the road that are not self-propelled are not required to have a liability policy. Liability is provided by the vehicle towing the vehicle.
And the policy we provided to this customer, covering physical damage to the trailer, was written with the understanding that it was for personal use. The policy becomes void once the trailer is used commercially.
Lastly, while the trailer is sitting, not being towed, anyone injured by the trailer would file a claim against both the owner’s home insurance and the employer’s commercial liability policy.