Torts and Personal Liability – Not Just Desserts!

iStock_000011023301XSmallWhen you hear someone mention torts, you are probably thinking of a delicious, mouth-watering dessert. Unfortunately, tortes are not actually the same as torts. The “e” at end makes a big difference in the word as it has a whole different meaning. In the world of insurance and legal dealings, torts are the basic civil law issues that give rise to claims and lawsuits between multiple parties. As it relates to you directly, it’s when your personal liability coverage is triggered under the home insurance policy.

Civil law is different from criminal law in that the violations of civil law are generally considered to be breaches of conduct between two parties. For example, if someone came to your house and slipped in a puddle of water on your front steps, that’s a civil law matter. It is an issue that’s between you and the injured party with no real effect on the rest of society. On the other hand, criminal law usually involves matters that are a threat to the well-being of society in general and are enforced by the police with the possibility of prison for violations. Civil law doesn’t result in such punishment as restitution is generally in the form of financial compensation.

However, just because you won’t go to jail for causing injury or property damage to another party does not mean you should take civil matters any less seriously. The U.S. is considered to be a very litigious society and, as a result, our liability insurance costs are frequently greater than those in other countries. In addition to the cost of the insurance, individuals and companies tend to buy more insurance in the form of higher limits of liability than those in other nations. The American Tort Reform Association (ATRA) is an organization created to attempt an overhaul of the U.S. civil litigation system. In many ways, the cost of American litigiousness is borne by all of us in the form of higher prices for goods and services because companies have to account for the likely cost of litigation down the road. A recent article in Forbes mentions the cost and concern to companies manufacturing in the U.S. as a result of civil litigation.

As an individual, you are not immune to the world of torts and lawsuits. Just because you aren’t at fault does not mean someone cannot bring a claim against you and potentially even file a lawsuit against you. Once a lawsuit has been filed, it can be very expensive to go through the litigation process and this is one area where your home insurance provides great benefit. If a settlement is reached, that would be paid by your insurance policy and it’s known as an “indemnity” payment. However, in many lawsuits, the settlement only comes after a lot of work in finding out the facts of the case. This process will require an attorney working on your behalf and your home insurance will also pay these costs. These expenses are known as “defense” costs since they are spent to defend you from claims made against you. In many, if not most, cases the defense costs are greater than the indemnity settlement!

So, the next time you hear someone mention torts, you might think about it a little differently than just anticipating dessert. You might also know that a good home insurance policy will help protect you against torts so that you can enjoy your tortes in peace!

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