5 Things You Must Know About Liability Health Insurance Policy

There are various types of liability insurance plans in India. By purchasing a liability insurance plan, you can protect your business. There are plans to protect individuals from various risks including negligence and injury. You can buy a liability health insurance policy to protect your employees and to keep your business interests. You can save legal payouts as they will be borne by the insurance company.

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*Premium starting from ₹110/Employee/Month for ₹1 Lac Sum Insured covering Health & Wellness Needs (excluding GST)
#Premium may vary on the basis of coverage type & add-ons
**All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

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What is a Liability Insurance Plan?

A liability insurance policy is designed to protect the interests of businesses and individuals against third party liabilities. A third party may sue the business for negligence, malpractices, and injuries. The insurance company will compensate for the damages and settle it directly with the third party.

A  liability insurance plan covers legal liabilities arising against a company or an individual due to property damage, bodily injuries, personal injuries, and advertising injuries to a third party. A liability insurance plan will repay the costs associated with the loss of health due to injury or sickness.

How Does a Liability Health Insurance Plan Works?

Before buying a liability insurance plan, there are certain things that you should be aware of-  

  • FIR -The third-party should register a complaint at the nearest police station. It is an important document based on which the insurance company will verify other details and the insurance claim will be processed quickly.
  • Coverage - The limit on coverage will not be fixed while buying the insurance policy. The insurance company will make the payment to the third party as per the terms and conditions of the policy and in accordance with the court of law.
  • Submission of Documents - The third-party should submit all the required documents as specified by the insurance company. The documents should include the original FIR and original bills of expenses incurred after the accident.

1. What is covered in a Liability Insurance Plan?

When you buy the ‘liability insurance plan’, you should be aware of the coverage that it offers. A standard liability insurance policy covers the following-

  • Death of a third-party
  • Bodily injuries caused to a third-party
  • Permanent disabilities caused to a third-party
  • Third-party property Damage

2. What is not covered in a Liability Insurance Plan?

It is very much important that you should be aware of the exclusions of the insurance policy.

  • A liability insurance policy will not cover the damage to your own vehicle or property
  • The policy cannot be claimed more than once in a policy year. Hence, the third-party should file the claim by including all the bills and information that pertains to the incident or accident.
  • The third party should oblige the terms and conditions of the insurance policy.
  • If the third-party fails to produce the required information or documents, the insurance claim may be delayed or rejected.

3. When Should You File a Claim?

The third-party should be aware of the location and the party that should be approached to file the insurance claim.

As per the motor vehicle’s act, the third-party should approach the tribunal which is in the purview of the mishap. It should be the place of the residence of the owner of the vehicle as well. The location should also match with the driver’s residence or the injured person’s ordinary place of living.

4. Benefits of a Liability Insurance Plan

  • The plan will protect the policyholder against bodily injury or property damage. If the business entity is found liable for the personal injury to the third party, the insurance company will make the payout to the third party.
  • The personal injury coverage includes discrimination, segregation or harassment
  • Bodily Injuries - The bodily injury coverage includes mental anguish, mental injury, humiliation, and shock which are due to physical injury. It covers death that takes place due to the negligence of the employer will be borne by the insurance company.
  • Medical Payments - The medical payments should be done by the employer if there is a risk to the health of the employee or the third party. The hospitalization charges will be paid by the insurance company.
  • The liability exposure against various kinds of business operations can be covered with a single policy. If a business entity is having branches at various geographical, it is possible to subscribe to a comprehensive policy so that the business interests are protected very efficiently.
  • Personal and Advertising Injury - The personal injury including the mental impact on the third party will be covered by the insurance policy. Advertising injury covers any liabilities against a business while advertising its products, goods, and services
  • Medical Expenses - Medical expenses incurred while offering the treatment or recovery of the third party will be borne by the insurance company.
  • Third Party Liability Cover - if the third party injures due to your negligence, the insurance plan will protect you. If a customer falls by walking on a wet floor or your business premises, you are liable to pay the damages. If the person is hospitalized, the insurance company will pay the bills.
  • Lawsuit Protection - Even though you have not committed a fault, you will get help by buying the insurance policy. If the third party files a lawsuit, you will get protection. Professional liability insurance will help in defending your business. You can cut down out of pocket expenses.
  • Protection from Dropped Cases - In some cases, the third party will file a case against you or your business and the case may be dropped later. The case may be dropped before reaching the trial stage. However, you will incur losses in terms of time, effort and money. These losses will be borne by the insurance company.
  • Employee Coverage - as you expand your business, you might include new employees. The information should be shared with the insurance company so that new employees will also be covered by the insurance policy.

5. Other Types of Liability Policies

There are other types of liability policies which can be selected as per the type of business.

  • Medical Malpractice Liability - It is a professional liability insurance plan which can protect the interests of doctors and physicians. The liability insurance plan can be subscribed by dentists, nurses, etc.
  • Professional indemnity - The insurance plan covers individuals and companies. The errors and omissions committed by professionals will be covered by the policy.
  • Product liability insurance - If a business produces or supplies products, the harm caused due to the usage of the products should be borne by the business. The insurance cover protects risk against accidental death, bodily injuries, and other risk factors.
  • Public Liability Insurance: The injury or damage to persons while conducting business operations should be covered prominently. The business is responsible for the damage of other party property or person. The liability can be covered by a comprehensive insurance policy.


Liability insurance plan gives protection for businesses and professionals against various kinds of risk factors. The insurance company will bear the expenses as per the contract and third-party claims will not affect your business.

Written By: PolicyBazaar - Updated: 16 February 2022
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