What are the differences between Public Liability Insurance and Compulsory Liability Insurance?

Public Liability Insurance is a policy that seeks to cover any bodily injury or property damage that has been caused by an accident. It covers damages suffered by the insured, as well as damages to third parties.

This insurance covers those accidents inside and outside the insured's premises but caused by their work or operations.  Suppose a third party suffers any damage or injury from any good or product that has been bought or sold by the insured. In that case, any good or product  purchased or sold by the insured is also covered by Public Liability Insurance.

Public Liability Insurance is a way to protect the home or business of the insured, indemnifying third parties who have filed a lawsuit or claim for bodily harm to other people, material damage to property or property of a third party, or property damage. This, taking into account that the activities that are the source of potential claims include the properties, operations, products, and finished works of the insured.

This includes liabilities that exist in the event of a disaster caused by equipment failure, fire, bodily injury, flood, or negligence. This type of policy also protects the personal safety, reputation, and privacy of the insured, responding in cases that warrant it in the defense of the insured, as well as personal injuries.

This way, a certain peace of mind is ensured, and the legal consequences that could harm the insured's properties are handled, guaranteeing that both the company and the partners or the family do not bear the legal or economic consequences of a lawsuit.

Among the main advantages of having Public Liability Insurance, is the possibility of extending the coverage in the event that a relative or close person is responsible for damage to the property of a third party. On many occasions, it can also include bonds and legal expenses in the coverage.

If you live in Puerto Rico and own a vehicle, Law 253 of Compulsory Liability Insurance requires you to have a compulsory insurance or public liability policy to cover any damage that may be caused to the vehicle of a third party involved in an accident caused by the insured.

Compulsory Liability Insurance covers damages caused by the insured's car to another vehicle in an accident, and in Puerto Rico, to have compulsory insurance, the owner of the vehicle must have paid the corresponding premium when renewing the tag of the car or the payment of taxes.

In this case, the validity period of the compulsory insurance will be the same as that of the label, and the policy will be exactly the same for all insurers that offer the service. Its characteristics were approved by the Office of the Insurance Commissioner of Puerto Rico.

The maximum coverage amount of the policy per accident is $4,500, although it includes other supplementary payments such as a $100 repair incentive, which is paid to the claimant who was not responsible for the accident and who demonstrates that the vehicle was repaired after receiving insurance payment.

If, due to the accident, the insured's vehicle suffers any damage that prevents it from moving under its own power, the cost of the tow truck to tow the vehicle to the residence will be covered and reimbursed by the compulsory insurance. In the same way, the amount corresponding to the Sales Tax (IVU) will be reimbursed, which has been applied to the parts and labor that have been used in the repair of the vehicle.

To find out if a vehicle has compulsory insurance, or compulsory liability insurance, it is enough to verify the Certificate of Compliance (Voucher), since it constitutes sufficient evidence that, at the time of the renewal of the vehicle license, the insured has a valid license and compulsory liability policy.

Although both types of insurance constitute a way for the insured to assume and discharge civil liability before third parties, in the event of an accident, the insured goods are different. While the Public Liability Insurance protects properties and assets against damage to third parties as a result of the operations of a company, the Compulsory Liability Insurance covers damage caused to a vehicle.

Another important difference is that the Compulsory Liability Insurance covers only material damage caused to a third party's vehicle and not to the insured's vehicle. Meanwhile, Public Liability Insurance protects both physical assets and the personal integrity of the insured in the event of receiving a lawsuit or claim from a third party who has suffered property damage or bodily injury as a result of the business operation.

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