Liability Insurance
Coverage that pays for harm or damage you cause to other people or their property.
Liability insurance protects you financially when you are responsible for injuring someone or damaging their property. It covers the cost of compensation and often legal defence, which can otherwise be ruinous. Common forms include household third-party liability, car liability, and professional liability for certain jobs. It is usually inexpensive relative to the protection it provides, since a single serious claim can run into large sums. Many people underinsure here, focusing on their own property while overlooking what they might owe others.
Example
Your child accidentally breaks a neighbour's $4,000 window; household liability insurance covers the cost instead of you paying out of pocket.
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Related terms
Insurance Premium
The recurring amount you pay, monthly or yearly, to keep an insurance policy active.
Insurance Deductible (Excess)
The amount you pay out of pocket on a claim before your insurance starts covering the rest.
Insurance Claim
A formal request to your insurer to pay for a covered loss or event.
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VAT (Value Added Tax)
A consumption tax added to the price of most goods and services, ultimately paid by the end consumer.
Tax Credit / Allowance
An amount subtracted directly from the tax you owe, reducing your bill euro for euro.
Tax Base
The amount of income or value on which tax is calculated, after deductions but before credits.
Tax Return
An annual filing that reports your income and deductions to calculate the tax you owe or are refunded.
Tax Deduction
An expense subtracted from your taxable income, lowering the amount of income that gets taxed.