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WHAT TYPES OF DAMAGES ARE COVERED BY THE BOP?
Your liability insurer will pay damages that you are legally obligated to pay as
a result of “bodily injury,” “property damage” or “personal and advertising injury,”
up to the policy limits and subject to your deductible. Punitive damages are generally
not covered, although there may be some exceptions.
Bodily injury means injury, sickness,
disease or death; it may include injuries that are emotional or mental, such as post
traumatic stress syndrome or humiliation.
Personal and advertising injury includes
libel, slander or any defamatory or disparaging material or a publication or utterance
in violation of an individual's right of privacy; infringing the privacy or copyright
rights of another in your advertisement; wrongful entry or eviction, or other invasion
of the right of private occupancy; and false arrest or wrongful detention.
WHAT IS COVERED MEDICAL EXPENSES?
For the most part, your BOP liability coverage is for situations where a third party claims you were negligent and sues for damages. The medical payments coverage is an exception, as it pays medical expenses for bodily injury to third parties that occurs on premises you own or rent or as a result of your operations regardless of fault.
People are less likely to sue you if they receive prompt medical payments to cover
the costs of any injuries they have sustained for which they could claim your business
or organization is liable. Medical Payments coverage gets the payments to them without
their having to file a lawsuit or go to court and engage in a protracted claims process.
This coverage also allows your insurer to pay small nuisance claims without the need
for costly legal expenses.
People who commit insurance fraud usually know that for
claims below a certain amount, insurers prefer to pay the claim or settle rather
than incur the legal costs to defend against the claim. If you have a relatively
high limit for medical payments, your insurer can more readily dispose of a lot of
smaller claims. However, submitting multiple medical expense claims could negatively
impact your insurance claims history. If you are in a business with significant traffic
from the public, such as a retail store, be sure to discuss the possible consequences
of your medical payments limit on your claims history with your agent.
WHO IS INSURED?
BOP liability coverage insures a sole proprietor, partners or partners named in the policy "Declarations," but only with respect to their duties on behalf of the business. The spouses of sole proprietors or partners are also covered. If your organization has officers and directors, they are insured, as are your stockholders, but, once again, and this applies to all parties, only with respect to their duties or liabilities in connection with the business. Employees and volunteer workers are insured for acts committed within the scope of their employment in your business.
Small Business Liability Insurance
by the Insurance Information Institute www.iii.org
WHY DO I NEED LIABILITY INSURANCE?
Good liability risk management can reduce the chances that your business will be
sued, but it can never eliminate the risk entirely. You or a member of your organization
can make a mistake that injures someone or damages property. Your mistake could harm
the reputation or interfere with the privacy of a customer, client, competitor or
member of the general public. When such injuries occur, you may be legally liable
to pay damages to someone who suffers a loss due to your actions or inaction.
Depending
on the degree of harm and the number of people injured and/or value of property damaged,
a lawsuit could bankrupt your business. Even if your organization is ultimately cleared
of any wrongdoing, a determined plaintiff can keep you tied up in legal proceedings
for a long time, entailing significant cost to defend yourself. Liability insurance
pays the cost of your defense and protects your assets.
HOW ARE LIABILITY AND DAMAGES DETERMINED?
Everyone in society has a duty to take reasonable care that his or her actions do
not injure others. The same rule applies to business entities. Not repairing a pothole
in a parking lot, not lighting a dark stairway, failing to train workers how to do
their jobs safely and legally or failing to provide directions for the safe use of
a product can constitute negligence if a client, customer or member of the general
public is injured as a result. The legal meaning of negligence is failure to exercise
reasonable care.
If the parties do not agree to settle a liability lawsuit, there
may be a trial. Or, the parties may agree to use some alternative means of dispute
resolution, such as arbitration, and be bound by the arbitrator’s ruling.
The law
of the state where the lawsuit is filed sets the rules for the determination of liability
and damages. The amount of damages imposed in any particular case is, of course,
in part a function of the economic losses the plaintiff can prove he or she has endured
due to the defendant’s negligence. In some states plaintiffs may also be awarded
damages for
WHAT KIND OF LIABILITY POLICY SHOULD I GET?
For small businesses the most efficient and least expensive way to purchase liability insurance is usually as part of the Businessowners Policy (BOP) which combines property and liability insurance in one contract. Alternatively, a business may purchase a Commercial General
Commercial General Liability Insurance
Business and Commercial General Liability Insurance
