I would assume that when most people get a new liability insurance policy in the mail, they don’t take the time to read it.

I usually don’t.

But those who do will likely find that most liability insurance policies read like a foreign language, with convoluted pages of definitions, conditions, exclusions, and the like.

It can make your head spin.

Liability insurance policies are viewed as contracts between the insurer and the insured, and insurance law also incorporates most of the basic principles of contract law.

Because the insurance company is the party that writes the contract, or policy, any ambiguity is construed against it and in favor of the insured.

This is why the language in liability insurance policies tends to be so technical. Insurance companies have lots of experience at being careful with such things.

There are many types and forms of liability insurance policies.

The most common is automobile liability, which covers claims of negligence in the operation of a motor vehicle.

Homeowner insurance policies also typically include broad coverage for liability claims that may be asserted in different scenarios, such as when somebody falls down and claims injury due to a dangerous condition, when the tree you’re trimming crashes into your neighbor’s house, when your dog bites the mailman, when you drop your cigar at a cocktail party and ruin an expensive rug, or even a hunting accident where you accidentally shoot your best friend in the foot.

Yes, these things are typically covered under the liability coverage in a homeowner’s insurance policy.

Other types of liability insurance policies include commercial liability policies, which cover claims against business enterprises; and professional liability insurance, which covers claims against professionals such as doctors, architects, and, yes, even lawyers.

Under most liability insurance policies, the insurance company has two basic duties to its insured.

One is the duty to defend. When a lawsuit is filed alleging a claim that is covered by the policy, the insurance company is required to provide and pay a lawyer to represent and defend the insured in the lawsuit. Insurance companies keep a stable of law firms in tow that specialize in defending such lawsuits, and in fact I cut my teeth as a lawyer working for just such a law firm in my youth, many moons ago.

The other is the duty to indemnify, to pay any judgment that may be covered up to the policy limits of coverage.

And so, accordingly, the insured has little or no financial stake in the lawsuit, as the defense costs and the indemnity are all on the insurer. For that reason, the insurer under most policies retains the right to negotiate a settlement if it sees fit, in its absolute discretion.

And in fact, about 95 percent of all civil liability lawsuits are settled in this fashion.

Other duties that go along with a liability insurance policy is the duty of an insured to notify the insurer of an event that may give rise to a claim and to cooperate with the insurer in its investigation and defense. Sometimes insureds fail or refuse to do their part, thereby jeopardizing their coverage.

Another is the duty of “good faith” that a liability insurer has to its insured. This typically comes up with a serious claim that may exceed the policy limits of coverage. In such instances, an insurer has the duty to act in good faith to try to settle the claim and secure a release of its insured’s liability within the policy limits, if it can.

When insurers fail to properly heed an insured’s exposure to liability in excess of the policy limits, and gamble with their insured’s exposure, they can be held liable for “bad faith” for failing to protect their insured, and be liable for damages in excess of their coverage limits.

Day in and day out, people routinely pay their insurance premiums. Hopefully, they never need to use it. But if something bad happens, the legal protections provided by liability insurance are well established, and the civil justice system is here to ensure it.


-- Ken Garten is a Blue Springs attorney. Email him at krgarten@yahoo.com