Businesses have liability insurance because it help them if they make mistakes that harm others. When accidents occur, they often bring the business into conflict with a third party. These conflicts might lead to lawsuits, and any lawsuit might cause a lot of headaches. Most liability policies do address the costs that might arise from these lawsuits. As a result, the business can better weather problematic legal issues. 

Understanding General Liability Insurance  

Your liabilities are the chances you have of causing harm to third parties. When your mistakes or negligence harm someone, they might blame you for their losses. Most businesses carry general liability insurance, which covers common liabilities in most businesses. Though policies differ in how and when they offer coverage, they always help the business when it is at fault for an accident that harms someone else. 

A general liability policy might pay for bodily injuries, property damage or personal injuries (libel, slander, copyright infringement) that third parties sustain. A host of other policies can cover more specific liabilities in your space or industry. However, not only might the policy cover the costs of the victim’s recovery, it can also cover legal expenses.  

Why Policies Offer Legal Expense Coverage  

Legal assistance coverage is common within most liability policies. It can cover the insured business if a victim sues the business for damages. The policy can cover the insured’s own legal expenses incurred by responding to the claim. It can also cover the legal expenses of the party that sues the business, if necessary.  

Liability policies offer legal assistance because of the significant cost burden that might fall on a business if a lawsuit arises. Court costs, lawyer fees, judgements and settlements can add up quickly. Since this cost burden often falls on the at-fault party, then the business might have to pay. Unless you have the financial reserves to cover these costs on your own, you might struggle. This hardship could destabilize the business both in the short- and long-term.  

Though legal assistance is a perk of liability coverage, it is not all-encompassing. For example, policies will not cover punitive damages awarded by a court. Courts use punitive damages to make an example of, or punish, a criminal offender. Policies will never pay for claims that result from criminal or intentional acts. Therefore, by definition, they cannot cover punitive damages.  

To understand more about the benefits of your liability policy’s legal assistance, contact your business insurance agent. They can help you decide the best benefit structure to offer you optimal coverage.