What Is Liability Insurance?
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Insurance, by definition, is a contract where the insurer, for consideration (premium) agrees to indemnify another against a contingent or unknown risk of loss. It is used as a method to spread losses among many people who are insured with the same company. The insurer, by its policy, promises, in exchange for a premium, to pay to defend and indemnify the insured, in the event that a certain type of loss occurs within a specified period of time called the “policy period.” By spreading the risk of loss among many, each individual only pays a minuscule portion of the risk of loss insured against.
Liability insurance is limited to insurance against the risk of losses that can be incurred by a person for damages done to the person or property of another by an accidental or fortuitous cause.
In exchange for the promise to pay the premium charged, the insurance company agrees to provide the insured protection from various risks faced by an owner, developer, or builder of real property. The risks of loss taken by the insurer are listed on the policy. For each promise made by the insurer it charges a premium.
The policy will provide coverage for the following:
- bodily injury and property damage to persons injured by the insured;
- medical payments regardless of fault;
- personal and advertising injury; (a coverage that insures against the insured’s risk of loss for multiple offenses like libel or slander, advertising injury, false imprisonment, etc.) and
- contractual liability.
These are the principal coverages available in CGL policies. There are other coverages available to cover special needs of individual people, corporations, partnerships or joint ventures. If special needs exist for a particular construction project that faces risks not contemplated by a CGL, it is prudent to consult with a professional and major insurance brokerage that specializes in the industry involved in the case. You can find such brokers by conferring with others who specialize in similar projects, your state Department of Insurance, professional risk managers, or Chartered Property and Casualty Underwriters (CPCU), who act as insurance consultants.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts
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