Though you know other establishments submit insurance claims and have to deal with the lawsuits here and there, you may think of yourself and your business as being above the occurrences. But nothing could be further from the truth because accidents - and yes, lawsuits - can happen to anyone - even you!
Okay, now that we have actually confirmed it, let's outline how good liability coverage can help you.
In the event you find yourself embroiled within a lawsuit or a claim, your insurance should champion your cause by making a payout for any judgement against you as well as for the cost of defense. In order for the great wheels in the insurance machine to get going, however, you need to start the motion by notifying your carrier as soon as you incur any losses or damages or as soon as someone else makes a claim against you.
Of course, should you have several liability policies with several insurance companies - say, one for your directors' and officers' coverage and one for your general liability insurance - it stands to reason that you should alert all your carriers because, as a layperson, you may not be able to identify the correct correlations. Alerting the associated insurance companies should generally be done via your insurance agent who is familiar with the involved protocol.
After notification, your carriers should do any of the following:
• Let you know that your plan is not designed for coverage of the particular scenario you find yourself in.
• Tell you they will defend your interests but only under what is known as 'reservation of rights'. This means that your carrier will recompense any legal fees you incur for this particular case, but they may not make a payout for your final judgement or settlement.
• Inform you that they will cover your defense by making payments for your legal expenses and pay for costs that your judgement or settlement demands - up to your policy limits.
Even if you are told that you cannot rely on your insurance company to defend you and you are left with out of pocket expenditures towards your judgement or settlement, there's still a plan of action that is within the terms of your policy that you must take; and it works to your benefit as well: you must accommodate requests from the defense so that they can resolve the case favorably for you!
Ultimately, your insurance company may determine that the best fiscal way to go is by settling, regardless if you feel you were not in the wrong. No matter how strongly you feel about your innocence, this path will probably be in your interest.
PRIME Insurance, an A++ agency, has been recognized by numerous industry awards as well as by being appointed to do direct business with over 40 of the leading carriers (ACE, AIG, Liberty Mutual, MetLife, PROGRESSIVE, StillWater, USLI and more). We shop our broad network of resources to present you with tailored coverage at competitively lowest quotes and help you get the protection you need and deserve.
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