Liability insurance and legal fees

Hopefully, you've never faced a liability law suit. If that's the case, then you may not be aware of one of key benefits of liability coverage: if a suit goes to court, it is common practice for the insurance company to pay for your legal defense. And those fees can run up to be tens, or even hundreds of thousands of dollars.


Why do insurance companies do this? Because they have a vested interest in helping you win the case, particularly since liability claims tend to be multi-million dollar claims. Some insurance companies will tell you which lawyer to use, because winning it cheaper than paying.

Now let's go back to the injured patient from the beginning. Let's say his claim turns out to be frivolous and no award is justified. You still have to go court and pay your lawyer. Without liability insurance, you're still hit with a big bill. Which is why many business people see the legal fee coverage of liability insurance reason enough to buy it.

What kind of liability coverage is available, which should you consider?

There are very few "absolutes" when it comes to liability insurance, and there's plenty of differing opinions what you should and shouldn't do to protect yourself and your business. But one this is certain, your chances of being sued are greater than ever.

General Liability

To provide coverage for a broad range of acts that could cause a law suit, General Liability coverage has evolved. This is something of an entry-level product with limits that typically are not very high. If you have, or are considering getting General Liability, check the limits.

General Liability pays losses arising from real or alleged bodily injury, property damage, or personal injury on your business premises or at other locations where you normally conduct business. Often, General Liability insurance is packaged with Property coverage in a "business-owner's policy," or BOP.

Make sure you understand the scope of the coverage of your General Liability policy. If any of the following coverages are not specifically included but relate to you, weigh the pros and cons of buying them.

Products/Completed Operations Liability

This is something many ISOs need to evaluate. If you repair, maintain, or refurbish medical equipment, Products/Completed Operations Liability insurance covers bodily injury or property damage from equipment you've serviced or sold. For instance, if you do a PM on an MRI and miss a defect in the cooling system and something goes wrong with that machine and someone is injured, or property is damaged, you can be sued.

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