The purpose of liability insurance is to protect an individual or commercial enterprise from the claims of others. When a claim is made, liability insurance should:
- (1) Defend
- Pay for the defense of the claim or lawsuit brought by the claimant (known as the Duty to Defend), and
- (2) Indemnify
- Provide indemnification of the claim up to the limits of the particular policy. That is, pay the claim.
Common types of liability insurance policies are: Commercial General Liability (CGL), Business Owners Policy (BOP), Homeowners (HO), Errors & Omissions / Professional Liability (E&O), Employment Practices liability, Automobile Bodily Injury insurance and Commercial Automobile insurance.
Consequences for a Liability Claim that is Retained Instead of Transferred to Insurance
Most businesses and individuals have insurance coverage to protect against the financial risk of liability claims against them for personal injuries, damaged property, wrongful employment practices, professional services negligence (ex. insurance agent, accountant, doctor, or any service professional). Since these claims can be very costly both to defend and/or to pay, it is critical that those risk management efforts should not be frustrated by an insurance company’s failure to cover a liability.
Consulting with an attorney who is experienced in insurance coverage law is highly encouraged when dealing with an insurer’s denial of liability insurance. We would be pleased to assist you with your liability insurance claim, and invite you to contact us to set up a case evaluation.