Liability Insurance and Asset Protection
When it comes to protecting personal wealth and business assets, the first thing that comes to many people’s minds is insurance. There is no question that insurance can play an important role in asset protection. Not only is it often required by law, by your lender or by your landlord, insurance can be an effective first line of defense against liability lawsuits. However, to fully protect your assets, it is critical to understand what insurance is and what it does and does not do for asset protection.
Included within most typical insurance policies such as automobile, homeowner, landlord and business insurance are three main general categories of coverage:
Liability coverage – this is the coverage to compensate the other party for bodily injury or property damage caused by you. For example, if you cause an automobile accident and the other car is damaged and the driver is injured, your liability coverage will pay for the injury of the other driver and the repair of the other car. Property protection coverage – this is the coverage to replace or repair your property for any sudden and accidental loss or damage caused by a covered peril. For example, if your car is also damaged in the above accident, your property protection coverage will pay to repair or replace your car after you pay your deductible. Other additional protection – this is a broad category of coverages designed to help you get by during the period when your property is being repaired like a rental car when your car is in the shop as well as other miscellaneous coverages like towing and medical expenses for you and your passengers.
Liability insurance gives you a layer of protection against lawsuit and lost of assets. However, it has a number of limitations:
There are always limits on how much the insurance policy will pay for losses for which you are liable. If the court awards the person you’ve injured a judgment of $350,000 but your liability limit is just $100,000, the most the insurance policy will pay is $100,000. Guess who will have to come up with the remaining $250,000? That’s right: you! You will have to come up with the cash or face the real possibility of losing your home and/or other assets. There are many exclusions in your insurance policies. For example, any liability from an intentional or criminal act is excluded. Sexual harassment, employment discrimination or wrongful termination is typically excluded as well. Discharge of waste and other toxic materials is generally excluded. Liabilities arising from breach of contracts or agreements are typically not covered. Professional liabilities such as malpractice, errors and omissions are usually excluded unless a separate professional liability policy is in force. In other words, for a LARGE liability claim, the insurance company will try to find ways to avoid paying. So unless it is specifically and explicitly covered by the insurance policy, you are most likely on your own. In addition, any failure to disclose material facts in your application or failure to report any material changes after the policy is in force gives the insurance company a way out of paying a claim even if it is covered. Most insurance policies do not cover many more ways you can be sued. For example, you might be sued for misappropriation of other’s funds, fraud or allegation of fraud, breach of contract, slander, libel, copyright, trademark or patent infringement, divorce, accidents from a motorized speed race, a hostile working environment, a liability arising from a willful violation of an ordinance or a statute, suits from local, state or federal government agencies, just to name a few. You can’t even buy liability insurance for these risks in most cases. And if you can find insurance for these risks, they will likely cost a great deal.
There is no question that we should all carry the insurance required by law, the lender or landlord as the first line of defense against lawsuits and loss of assets. However, since there are limits on what insurance will pay and there are too many situations where insurance will not provide the coverage, you cannot rely solely on insurance to protect your assets.
Oftentimes, just having all your assets visible to an aggressive injury attorney invites lawsuits that might otherwise not be filed. There is no better way to stop a potential lawsuit from starting than to lead the injury attorney to think that there won’t be any money or assets for him to collect after spending all the time and money to go to trial even if he wins.
Insurance Law Attorneys Assure Equitable Settlements
If it does not already appear there, add to your collection of words to live by: “Never, ever, not under any circumstances, attempt to negotiate with an insurance company on your own. Working with an insurance company, always retain a lawyer.”
According to insurance law attorneys, although the insurance business typically falls into the “financial services” category, an insurance policy actually establishes a contract between you and the insurance company. Your insurance policy is not a financial instrument so much as it is a legal document. Attorneys and civil courts manage disputes over contracts, assessing justice and equity according to how much money changes hands.
Everyday experience easily confirms the fundamentally legal nature of the insurance business: read your insurance policy, noting the language it employs, and especially noting its specification of terms and conditions. When you buy or invest in an insurance policy, you establish a simple agreement with your insurer. You will leave your money with the insurer in exchange for the insurer’s agreement to pay the costs of accidents, illnesses, and “torts”-the assorted nasty things people can do to you. As long as you continue to deliver your money in good faith, the insurer must continue to protect you according to the terms of the agreement.
Two kinds of disputes may arise between you and an insurance company: In one instance, your own insurance company denies a claim on your policy, in effect saying that your particular accident, illness, or tort was not really part of your agreement. In the other instance, another person’s insurance company wants to settle your claim in order to prevent your filing suit against the person and the company.
In the first instance, you are most likely to become embroiled in a dispute with your own health insurance provider. You request or already have received medical treatment for a serious illness or accident, and your insurance company refuses to pay for your procedure, leaving you obligated to pay a large bill. You very likely will hear “previously existing condition” or “unauthorized treatment.” A few major health insurance providers have become notorious for denying clients’ claims with these two apparently magical phrases. In this kind of dispute, the language of your insurance policy frequently becomes the core of the conflict. You need an attorney, who in turn may need to depose some expert witnesses and file suit against the insurance company. With the assistance of an experienced insurance law attorney, you have a very good chance of prevailing in the dispute.
In the second instance, the other party and his or her insurance company have calculated how much the other person’s negligence or malfeasance has cost you, and they are prepared to pay you according to their calculations. According to veteran insurance law attorneys, settlement offers usually pay strictly for medical costs and lost income; they seldom compensate you for “loss of the enjoyment of life,” nor do they provide for lingering consequences of the other person’s irresponsibility. Because your insurance law attorney probably will take your case “on a contingency,” meaning that you pay legal fees only if you win your case, you have nothing to lose and everything to gain by retaining professional counsel and letting your advocate do the calculating and talking.
Public Liability Insurance
Public liability insurance is the insurance that covers the risk of amount you may need to pay a customer if suffers any injury at your business premises. It also covers the risk if your business causes any damage to their property. Moreover, you will also get reimbursement for money paid as legal charges for defending such claims. This is particularly important because even if court does not award any damages, still you need to pay large amount of money as legal fees.
Why do I Need a Public Liability Insurance?
Necessity of public liability insurance can be understood by the fact that no one can run a business that has no risk at all. You cannot afford to ignore the risk factors associated with any business. Neither can you remove risk from the business completely. Furthermore, it is your legal obligation to compensate the money for any injury to your customer or loss of his property caused due to your business. Do not take it lightly in any case, because sometimes it may go as high as more than a million dollars. What is in your hands is to buy a public insurance policy so you may not have to pack your bags in the event of worst disaster. No matter how big amount a customer claims, insurance company will always be there to your rescue and reimburse full amount of claim along with legal fees. With the bad weather friend like public liability insurance standing behind, you will be able to concentrate on your core activities confidently rather than praying that worst should not happen.
Some Typical Examples:
Here are some examples of when you would need public liability insurance. You own a plumbing company. One of your client calls you repair something in his kitchen. While trying to find the fault you suddenly burst the pipe. Water comes out with so much pressure that it completely damages the computer system and carpet of the client. You will have to compensate for the losses. Now let us take another example. You operate a marketing business from office. Your customer twists his knees while visiting your office because of poor quality carpet system. You will need to pay claim for the injury. Similarly, if you deal in building construction and a passer by is injured because one of your employees dropped something. You need to pay for the injury. The possibilities are endless. Instead of wasting time and energy on exploring possibilities, it will be better to buy a public liability insurance and rest assured.