As a business owner, you must know about the importance of having a robust Commercial General Liability (CGL) policy to protect your company from unexpected lawsuits and claims. While a CGL policy covers you for direct liabilities resulting from property damage or bodily injury to third parties, there are often additional costs associated with such claims. These additional costs are known as supplementary expenses, and knowing all about them can provide a clearer picture of your overall coverage
What are the different types of supplementary payments?
Beyond the main liability limits, your CGL insurance policy includes specific provisions for supplementary expenses. These are typically paid by the insurer in addition to your policy's limits of liability, ensuring that various associated costs do not erode your primary coverage.
Some common examples include:
- Legal defence costs: These include attorney fees and other legal expenses incurred in defending a covered lawsuit.
- Court costs: Expenses such as court filing fees and costs for official records of proceedings.
- Bail bonds: Premiums for bail bonds required because of an accident arising out of your business operations.
- Appeal bonds: Costs associated with bonds required to appeal a judgment in a covered lawsuit.
- Loss of earnings: Compensation for your lost earnings if the insurer requires your attendance at trials or hearings.
- Pre-judgment interest: Interest on judgments that accrue before the final judgment is entered, as required by law.
- Post-judgment interest: Interest that accrues on the judgment amount after it is awarded until it is paid.
Need for supplementary payment coverage
The inclusion of supplementary expenses in your CGL insurance is crucial because it ensures that legal and other associated costs do not deplete your primary liability limits. This distinct coverage offers several key benefits:
- Without this coverage, a significant portion of your policy's limit could be used up by these additional fees.
- It ensures more of your primary policy limit remains available for actual damages or injury claims.
- It lets you preserve the financial health of your business through better protection against liabilities.
- For instance, substantial legal fees in a lawsuit would directly reduce your available payout without this provision.
This is not the same as professional liability insurance, which provides coverage for errors in the services you provide that result in financial loss.
Conclusion
Understanding supplementary expenses under your commercial general liability insurance policy provides a complete view of the protection you receive. These additional payments ensure that the costs associated with defending a lawsuit do not diminish your primary liability coverage. Don’t forget to read your policy document to understand exact coverage, so that you can have complete peace of mind while running your business.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.