Liability Insurance Company
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A general liability insurance company provides protection for all sizes and types of businesses against the loss of their assets. When a business is sued by an employee (past or present) or a customer and ordered to pay damages to the injured party, a liability policy pays the damages. In most cases, the insurance protection keeps the business from selling assets or perhaps even declaring bankruptcy to pay the court-ordered judgment. A company may purchase this type of protection as part of a packaged business owners policy (BOP) that also includes property insurance. However, the liability component of a BOP often has low coverage limits that may not be suitable for some companies. For higher coverage limits, most companies will purchase separate commercial general liability (CGL) insurance policies. Certain companies may feel that even these policies do not provide enough protection. They may also decide to purchase some type of umbrella policy that will pay court-ordered damages beyond the coverage provided by the primary CGL policy. A reputable general liability insurance company will have knowledgeable agents who can help business owners make wise decisions about the types of policies and coverage limits that are needed to full protect the business's assets.
Several factors will go into determining the amount of coverage a company should have and the types of injuries that should be covered. A knowledgeable agent that represents a general liability insurance company will discuss such issues with clients as the business's level of risk, the litigation reputation of the state in which the business is located, and the risk tolerance of the business owners. Let's take a brief look at each of these important factors. First, some businesses are inherently more dangerous than others. For example, it's highly unlikely that anyone will sue a self-employed accountant who works out of his home office. However, a major manufacturing corporation will have warehouses, heavy equipment, and perhaps toxic chemicals on their premises. The likelihood of someone being injured is much greater for the manufacturer than for the self-employed accountant. The agent and client should discuss the risks inherent in a particular business when deciding on the types and levels of CGL coverage that can be provided by the liability insurance company.
The second factor concerns the reputation that a state has for awarding high damages in personal injury lawsuits filed against corporations. The juries in some states are known to be generous in their awarding of both damages while juries in other states seem to be more circumspect in their monetary awards. An agent with a general liability company that is writing policies for businesses in a generous state will want to recommend high levels of coverage to the clients whose companies are located in that state. In addition to a primary CGL policy, the agent may also recommend an umbrella policy. The third factor involves the risk-tolerance of the clients. Some people want to be insured to the max against any and all possible risks. Others are too willing to take unnecessary chances. A knowledgeable agent will help clients balance their tolerance for risk so that they purchase an appropriate CGL policy at a reasonable price. A careful consideration of each of these factors, and perhaps others, will enable a general liability insurance company to provide a high level of service to its clients.
King Solomon wrote that: "The tongue of the wise useth knowledge aright: but the mouth of fools poureth out foolishness" (Proverbs 15:2). A knowledgeable general liability agent can often advise clients on ways to reduce risk and the likelihood of having a lawsuit brought against them. High quality control standards will ensure that manufacturers sell products that are safe when used properly. Businesses should keep all records up-to-date and have a written document retention and archival policy. Employees, especially those who work with heavy equipment, factory machines, and with toxic chemicals, should be properly trained. Workplace safety should be a priority for all companies, but especially in factories and industrial settings. The liability insurance company will probably require its policyholders to report all accidents or any other incidents that might lead to a future lawsuit, to keep careful records pertaining to any of these kinds of situations, and to cooperate with any investigations that may arise. If the business fails to comply with these provisions, the company may not have to pay any of the damages that are awarded to the plaintiff against the business.
A liability insurance company may specialize in a certain type of coverage rather than selling CGL protection. For example, when employees are injured at the workplace, they are usually eligible for workers' compensation. Almost all employers are required by state law to carry workers' compensation coverage. Though the workers' compensation helps injured employees, its primary purpose is to protect employers from being sued by an injured employee. The self-employed accountant mentioned in an earlier example may not have any employees. He might not be too concerned about clients injuring themselves in his home office, either. But he may purchase some type of professional policy that protects him from a lawsuit against a disgruntled client. Similarly, physicians carry malpractice insurance to protect themselves in the case of a patient's lawsuit. Corporate officers usually purchase a directors and officers (D&O) policy that protects the corporation from the words and actions of its directors and officers. Regardless of the type of policy, policyholders are advised to be aware of what types of injuries are covered and the maximum coverage limits. A policy may have a maximum payout for a policy period or per occurrence. Punitive damages are usually not covered under these types of policies. Here again, the advice of a knowledgeable agent representing a reputable liability insurance company will be invaluable to the potential policyholder.
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