Before we can discuss how business liability insurance can be affected by a personal injury claim, we must first define business liability insurance. This is a good way for people who have businesses to understand this kind of insurance coverage and understand their need to have it. Now, if you own a company or a business and your workers get injured as they work for you, these workers are likely to consult a lawyer to claim workers compensation from your company.
This can have some serious ramifications for your business if the judges award huge amounts of money to the workers as compensation. That is why one of the smart moves from your side would be to have a consultation with a Richmond personal injury or Bergen County personal injury lawyer. This will help you to be prepared for any possible issues, and in most cases, you will be able to avoid them.
What is business liability insurance?
A business liability insurance coverage protects the financial interests of businesses and companies in the event where they face lawsuits such as personal injury claims and other third-party claims that can arise. With the business liability insurance, your company will be covered against direct financial liabilities as well as legal defense costs that arise from a personal injury claim.
The three types of business liability insurance are:
- General liability insurance. This means that a company is covered against any form of liability insurance that is related to the workers of the company. Personal injury claims can fall under this kind of insurance coverage.
- Professional liability insurance covers issues that have to do with the employees of the company or any other form of liability that arise due to your company’s errors and omissions. It is also known as professional indemnity insurance. Any mistakes that are made in the process of offering professional services will be covered here.
- Product liability insurance is the third form of business liability insurance that protects a company or a business if their products cause injury or other kinds of harm to third parties. At times businesses face lawsuits due to claims from product users who get harmed by the said products. This kind of coverage is important for companies and businesses that produce consumer products.
What is personal injury insurance?
To understand how businesses can be affected by personal injury claims, it is also important that you know what this kind of claim is. When someone is injured as a result of negligence on the part of a company, business, or another person, they will file for personal injury claims. Some of the common personal injury claims include injuries suffered from slip and fall accidents, workplace injuries, defective products, traffic collisions, and so on. Professional malpractices in hospitals may also result in personal injury claims.
How Does a Business Liability Insurance work?
So, how does business liability insurance work? What happens when someone files a claim for a personal injury against the company? Who will make the payments and how does a business or a company go about this situation? Well, the company that has taken a business liability insurance will not be liable for these claims. Rather, the insurance company with which the company has a cover for business liability will pay for the claims.
A company such as a small business, a partnership, or even an LLC will be exposed to financial risks if they do not have business liability insurance. You see, business-related lawsuits can be quite expensive when a claim is given to a third party. This is because there are normally exorbitant expenses related to these kinds of claims.
What are some of the expenses covered by business liability?
- There are legal fees that are involved and these can weigh down on the financial ability of a company. Defending the company against a personal injury claim for instance will involve the services of attorneys. These legal defense expenses will be covered by the insurance company.
- Business liability insurance coverage will also protect the assets of the company. Property insurance and liability insurance is normally bundled together, meaning that damages or loss of company assets will be covered.
- There are legal obligations that arise from personal injury claims such as medical fees for customers or clients hurt in a company, on the job injuries, and products harming users. When such claims are awarded to the third parties by a court, a company would have to incur huge costs. Luckily, with business liability insurance the costs will be paid by the insurer.
- There are other costs such as compensatory damages and non-monetary losses that an injured party can be awarded. Punitive damages can also negatively affect the financial obligations of the company. However, with business liability insurance, a company needs not to suffer such costs.
- For companies that rent a commercial property where they carry out their business. Business liability coverage, in the form of general liability insurance, will help these companies get compensated in the events of misfortunes. Fires, floods, electrical faults, physical catastrophes, molds, and other forms of misfortunes will be paid for by the insurance company.
- Business liability insurance will also pay for the claims brought against the company such as libel, misleading advertising, false advertising, slander, and copyright infringement among others.
Why a business or insurance company should settle personal injury claims out of court
In cases where a business is not insured against business liability, it would be a good idea for an out of court settlement of the claims. Even for insurance companies, there are many advantages of settling personal insurance claims out of court. Here are the advantages:
- A trial can be lengthy and costly at the same time. They can last a few days to a few months. However, preparation for the trial involves attorneys and is costly.
- With a settlement, both the plaintiff and the defendant know the terms of the settlement. This is unlike in the case of a trial.
- Settlements make it easy for the parties to sort out the issue and go on with their lives, unlike a trial that can last long and is tiresome.
- Avoiding a trial reduces the cost of the attorneys significantly.
- The terms of a settlement are confidential. As such, none of the parties will suffer any reputational damages in the process.
In conclusion, any kind of insurance claim can be expensive for a company. Therefore, sufficient care should be taken to ensure the right insurance coverage is taken. It is also better for a business to be careful and ensure the best safety standards for products, employees, and the services offered to avoid litigation.
