Many people want to start their own business but are hesitant due to risk and insurance issues. Widespread misconceptions about business insurance have kept millions of people from launching a startup. Here's a look at how a Commercial General Liability (CGL) policy works and some CGL policy misconceptions you must be aware of.
Some people or organizations think they can settle disputes or lawsuits simply by requesting the insurer issue a check for the coverage limit. For accidents up to a certain amount, insurance companies have a duty to defend their customers in court if a lawsuit arises.
The insurance company's duty to defend terminates upon payment of a judgment or settlement within the coverage limit. That means up until then, an insured individual has the right to be protected against lawsuits regarding a bodily injury or property damage.
An "occurrence" is an accident or scenario that leads to filing an insurance claim. Does an occurrence have to take place in a "policy territory" and "policy period", or is there a degree of flexibility? It depends on what the plan states in print.
Typically, an insurer must defend its business clients that are legally liable for damages. Policies may state that insurers are not obligated to respond to a claim of an occurrence outside the policy's territory or period. Each business owner should have their own customized CGL policy that explains specific coverage and exclusions.
Confusion exists for many people surrounding insurance companies as to whether they are obligated to pay for injuries and damages that occur within the owner's policy period. But some scenarios may occur in which a CGL policy cannot pay a legal settlement due to the state's legal prohibition against payment of punitive damages.
CGL policies are still obligated to compensate victims for all damages, including punitive damages. The only way the insurer can avoid the responsibility of paying punitive damages is if the insurance policy states specific exclusions. It's still up in the air in some states whether insurers are required to pay punitive damages regardless of public policy.
This policy exclusion is commonly misunderstood due to the interpretation of "your work." The exclusion only applies to damage caused by work conducted by your operation, not third parties you have hired.
Street sweepers are classified as automotive rather than mobile equipment, despite common thought. That means liability for the machine is tied to an auto insurance plan, not a CGL policy.
At some point, your business may want to add more individuals or organizations to your policy. It raises many questions, though, as to the degree to which policy additions are covered when it comes to causing accidents arising from sole negligence.
There are many confusing issues associated with business liability and CGL policy misconceptions. It helps to work with an experienced insurance agency that has a deep understanding of CGL and risks in your industry. For answers to your questions about any type of insurance, contact us at Kneller Insurance Agency today. Our team is ready to help you craft the ideal policy for your needs.
