Business liability insurance may be one of the most important investments you make when starting and running a business as a way to protect your company and its assets against a potential lawsuit. Most insurance companies that provide liability insurance will hire a lawyer to defend you and also have money to pay to settle the claim or pay a judgment. However, some policies are wasting policies, which means that the money that is spent to hire the lawyer and defend you reduces the amount of available settlement value.
There are several types of coverage for liability insurance, and it is important to know them and how they could protect you and your business.
1. General Liability
General liability insurance (or business liability insurance) is the type of insurance most businesses should have. It generally covers bodily injury like slips, trips and falls, property damage, and personal injury that can arise from your business operations.
2. Errors and Omissions
Errors and Omissions insurance covers professional negligence for doctors, lawyers, engineers, and other professionals for damage caused by failure to do what they promised to do.
3. Directors and Officers
Directors and Officers coverage is intended to protect the directors and officers of corporations against shareholder lawsuits or other claims that they breached their duties in their capacity as director or officer.
4. Commercial Auto Insurance
Commercial auto insurance is important if your business requires people to drive vehicles as part of their job. If they have an accident, you want to have coverage of the business to protect against a liability claim.
5. Employment Practices
Employment practices insurance is often overlooked, but it can be very important. Employment claims are a very common form of liability claim against small businesses. This insurance protects against claims of discrimination under Title VII (The Civil Rights Act) or the Americans with Disabilities Act (ADA), or other claims of that nature.
Reservation of Rights
Frequently a lawsuit will have more than one claim involved. So, there will be a claim of negligence coupled with a claim of breach of contract. If the insurance does not cover breach of contract the insurance carrier may say that they reserve their rights to deny indemnity with regard to the uncovered claim and will send you a reservation of rights letter.
You should consult an independent lawyer who represents only you when you get your reservation of rights letter. There’s a rule in Texas that if the demand that comes in for settlement is below the policy limit, the insurance company is required to accept that if it is a reasonable demand. If they fail to accept the reasonable demand within the policy limit, they may be required to pay the excess judgment that is over the policy limit at a later time.
If you are in need of objective third-party assistance with your insurance provider or need help with a claim, contact us today.