Liability insurance, which is also called business liability insurance, provides protection for firms and company owners against legal claims that arise from the operation of their business. The liability insurance coverage that is provided may vary depending on the company’s demands as well as the provider that is used.
In general, liability insurance covers claims that involve:
- Slip and fall injuries on the premises;
- Copyright, trademarks, and other intellectual property rights;
- Claims related to marketing, for example:
- corporate reputation loss;
- defamation; and
- false advertising; and
- Some types of class-action lawsuits, for example, those involving hazardous torts.
In order for a business to protect its insurance coverage, it must make monthly payments to its insurance provider. The insurance company will then compensate the business for damages up to a certain amount.
The amount that is agreed upon will usually be included in the company’s insurance contract or policy.
What Is Employment Liability Insurance?
Employment liability insurance protects owners and operators of businesses by providing insurance coverage for claims that may be brought against the company by the company’s employees for illness or injuries that they might suffer while on the job that are the employer’s fault. This type of insurance also provides general liability coverage against injuries to employees and damages to company property.
If an individual is an employer, they will be required to carry supplementary insurance. Most businesses that have employees are required to provide:
- State disability insurance;
- Workers’ compensation insurance; and
- Unemployment insurance.
Employment liability is often included as a separate section of the workers’ compensation policy and serves as an extension of that coverage. It covers situations in which an employee may bring a civil action against a business for something other than an illness or injury that is outside the normal risks of their position.
This may include such claims as assault or false imprisonment in the workplace.
Do I Need Employment Liability Insurance for My Business?
State laws require that all businesses purchase employment liability coverage to compensate employees for any injuries that they may suffer while they are on the job. There are a few situations, however, when a business will not be required by law to purchase employment liability insurance for their company.
This includes when the owner is the sole employee or if the business is family owned and operated and is not incorporated.
What Other Types of Insurance Coverage May Protect My Business?
There are other types of insurance coverage that a business may use to protect itself. Some types of employment insurance policies may provide added protections that business owners may not be aware of, including:
What Are the Advantages of Liability Insurance?
One of the main advantages of liability insurance is that it saves a company both time and money when securing a legal defense in the event that they are sued. Legal proceedings can take a very long time and be very costly to a business.
An insurance carrier, however, may be able to absorb some of these costs in some cases. An additional advantage of having liability insurance is that an insurance company generally wants to make a settlement if a business is sued.
This may help improve the company’s network and relationships. This is because a company may be more inclined to continue doing business with another entity if they can reach a settlement instead of pursuing damages from them.
What Are Some of the Drawbacks of Commercial Liability Insurance?
One of the disadvantages of liability insurance is that a company may be required to pay a portion of the legal fees if they pass a certain cost threshold. These minimum amounts, similar to other insurance arrangements, will vary depending on the specific insurance plan that is used.
With small business liability insurance, for example, the specified conditions of coverage may vary greatly from the type of coverage that is provided by home business insurance. Another drawback is that a business may have a legal issue with their insurance carrier.
For example, a disagreement that arises regarding the terms of the insurance policy may influence how the company handles legal alternatives in the event they are sued. A disagreement may arise regarding which party is responsible for financing specific legal bills of damages amounts.
It is important to note that it may require separate judicial actions to address these types of disputes, which will result in more money and time spent.
What Happens if There Is a Business Insurance Dispute?
If a disagreement arises over business insurance coverage, the business should review the terms of their insurance policy or contract as well as contact an attorney. In most cases, these documents will outline how disputes are to be resolved.
A court will also examine the company insurance policy or contract in order to determine the rights of each of the parties as well as the scope of the coverage that was selected and provided. In some cases, however, the language in a contract may need to be clarified, especially if there are terms with multiple possible meanings.
In other cases, the court may impose monetary penalties upon the breaching party. Similar to other types of contract disputes, how the dispute is settled will largely be determined by the terms and circumstances of the agreement of the parties as well as the local and state laws that apply to the contract issue in the case.
What Role Does Commercial Liability Insurance Play in Court Proceedings?
An insurance company may assume responsibility for several different lawsuit-related issues, including:
- Assisting with filing and attorney expenses;
- Obtaining legal advice to safeguard company assets; and
- Advising on available options, for example, whether to pursue legal action or to settle the claim, which most insurance companies prefer.
So long as the insurance policy covers the violation or occurrence, the insurance company should pay any damages that are assessed as a result of the lawsuit. Business liability insurance is the same as other forms of insurance, for example, vehicle insurance.
Liability insurance covers costs up to a certain amount. If the damages amount surpasses the specified limit, the business may be forced to pay them in full.
Liability insurance may also exclude specific conduct or issues from coverage, for example, intentional injuries that are caused by the business.
Should I Contact an Insurance Attorney?
If you are an employer, liability insurance issues may be overwhelming. If you have any issues, questions, or concerns related to the insurance you are required to carry and any additional insurance coverage your business needs, it is important to consult with a workers’ compensation lawyer.
Your lawyer can explain the requirements in your state as well as the many different types of insurance policies that may be available to you. Your attorney can help you select the best types of coverage for your business needs.
If a claim has been made against your business by an employee and you have an existing employment policy, your insurance company may wish to settle the claim. It is essential to have legal representation during negotiations to ensure that the settlement is fair.
If any other issues arise with your insurance company, your lawyer can represent you and ensure your rights are protected.