Liability insurance policy for business is made to protect the business company against any accident caused by mistakes or neglect made to a customer by your firm. It is extremely necessary when being at suit with the client. The best way to minimize the risk of error is to work out the risk management plan for it to become a part of your property insurance plan. However, sometimes it’s just impossible to eliminate the risk.
You may find a liability insurance to be a part of a big package called “business owners’ policy” (BOP). It comes together with property and casualty insurance. Usually such BOP are offered to small businesses. However, there is a possibility to purchase a separate liability policy known as CGL – a commercial general liability policy. Though both policies offer nearly equal coverage, usually separate liability insurance serves better.
There are two variants of liability insurance policies:
1. Claims made. Claims made policy is the one to insure you against any claims laid by the client of your company. In this case the insurer must defend you and settle the claim. This type of liability insurance policy is widely used among construction outfits where there is much time needed for a defect or mistake to become visible.
2. Occurrence. This form of liability insurance policy is widely used by majority of policies like auto, home and health insurance policies. The idea of occurrence policy is to handle the claim and cover the defense costs which usually comprise attorney fee. The insurer will handle the claim till the end of the course despite of the fact the expiration date of your contract could run out.
The main difference between these two types of liability insurance is when the obligation of the insurer starts and ends. When speaking about “occurrence” type, it gives the coverage only during the policy period. When accident happens to a third-person, not to you or the insurer, it means there is a trigger for your liability policy to give coverage. However, there could be an amendment to the policy concerning “continuous or repeated exposure to substantially the same harmful conditions”. It means the coverage for the third-party could be given even after a lapse of time. For example, a gravel pit could cause the neighbor to fall ill as a result of constant inhalation of gravel dust, thus he would be paid the coverage.
