Does Commercial General Liability Insurance Protect My Businesses
(SHORT ANSWER: NOT MUCH.)
Published on November 2015 | By Mark NeJame - Orlando Litigation Attorney; Vanessa Louise Braeley contributed to this article.
Our city has a proud and diverse group of entrepreneurs. From clothing boutiques to juice bars and everything in between, businesses are open to the public around the clock. To business owners, this means money. To lawyers, this means lawsuits! We are paid to protect you, and if necessary, fight for you. We prefer the former (well, some of us do), and a huge tool in our arsenal is a strong commercial general liability policy (CGL).
General liability policies protect your business from lawsuits against bodily and personal injury claims, property damage, and personal and advertising injuries. CGL policies are extremely broad, but don’t feel comforted by this. When drafting the policy with your agent, the majority of your conversation will revolve around issues you a letter either denying coverage, and citing to the advertising injury exclusion. Hmph, that’s weird, you think. I’ve been paying them $1500 dollars per month for years. Isn’t this what I’ve been paying for? Right, well, in the world of logic, you would be correct. But the Land of Commercial Insurance is silly and nonsensical - coverage of a claim is like spotting a unicorn. You then realize that when you purchased your policy from Todd the Insurance Man, that you had no idea what an “advertising injury” was. And Todd the Insurance Man is not Todd the Lawyer – he is driven by commission and getting that signature. Closing the deal. This does not fare well for Jane’s Boutique years down the road… Folks, this story does not end well. So, pay attention class. Here’s the Cliff’s Notes so you know what to ask your lawyer and Todd the Insurance Man when you call to review your policy (which you are going to do, right?.
There are two key components to CGL policies: to defend and to indemnify. The duty to defend lawsuits filed against your business is far more broad and favorably interpreted than the duty to indemnify. Upon notifying the insurance company of a pending or potential claim, the insurance company will determine whether they have a duty to defend a particular claim. If there is a clear exclusion in the policy for that type of claim, the insurance company may not have the duty to defend – however these areas are hotly litigated, so always fight for coverage! Oftentimes, an insurance company will issue what is called a Reservation of Rights or “ROR” letter, which means they will agree to defend your business, but reserve the right to deny coverage in the future. What does this really mean? Generally, you’ll get an insurance company-issued attorney to defend the suit, but if there is a judgment against you, that’s on you (any maybe even the legal fees for the defense). Here’s where the duty to indemnify is important. If you get an ROR letter, contact your lawyer ASAP! These can be tricky. What’s the lesson here? Todd the Insurance Man is not a lawyer. Chances are your policy contains exclusions that were not explained to you and will put you on the hook for legal fees and more in the event of a lawsuit. Payment of monthly premiums does equal coverage. You get the picture. So get out your policy, pick up the phone and get protected! It’s much cheaper than fighting.