LIABILITY INSURANCE
Why should I obtain liability insurance?
The objective of a liability policy is to protect the holder against lawsuits originating from accidents taking place at the insured premises or during an insured activity. You must remember, however, that the INS (Instituto Nacional de Seguros) will not pay out a liability claim based on your word; there has a to be a court ruling and judicial process for you to be given the money.
What does liability insurance pay for?
The amount of money determined by the Costa Rican Law Courts will be paid to a third party (person or people related to the claim) in compensation for accidents causing personal injury, property damage or loss or death. Depending on the policy, this can also cover the legal costs if the Court decides that they should be paid by the insured.
Who is a candidate for insurance?
Any person can obtain liability insurance; from homeowners, hotels, restaurants, shops, food manufacturers, tour operators, etc. The policy is based on a certain activity or premises; if there is the slightest possibility of an accident occurring to a guest, customer or client, it is recommendable that you obtain liability insurance.
What does this insurance cover?
There are two kinds of coverage available:
- Against injury, loss of life and limb.
- Against damage or loss of property.
Depending on your needs, you can have a separate limit for each coverage; however, a combined limit is common. With this combined limit, the INS will pay up to the insured limit (per accident) despite the details of the award.
For how much should I be insured for?
We recommend you imagine the worst case scenario of what could happen in an accident; this, then, should be your recommended limit. You must remember though, that in Costa Rica, liability payments have not gone over the top like in other countries when it comes to punitive damages, pain and suffering, deep pockets, etc.
How much will the policy cost me?
Generally, the premium percentage of the insured amount is 1% a year. The precise rates are fixed by the INS depending on individual cases, basing it on the risk perceived as described in the policy application. This form needs to be filled by an agent, who needs to visit the premises. Additionally, it is common for the INS to send an inspector before determining the rate; he/she will interview the applicant and confirm the information filled out in the form.
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