Many businesses recognize the need to have a general liability insurance plan. It offers perhaps the most used form of business insurance. It protects the company from claims made against it.
But, there is one form many do not always understand. That is contractual liability. What is it? Do you need it? Or, perhaps more importantly, do you have it?
A General Definition
Contractual liability is a term used in a variety of ways. When not considering the insurance industry, this term refers to any requirements listed in a contract. These specifications create a requirement of those in the contract to complete it according to the terms listed. It is enforceable in court.
How It Impacts You
Within the area of insurance, it offers a more specific level of protection. In this application, it is the coverage given to the insured party on the policy when that party assumes the financial consequences of another's actions. To clarify, consider this. Contractual liability in this form can be in a written form or just communicated verbally. It includes negligent acts or omissions that the insured party makes.
Today, contractual liability is a component within most commercial general liability policies. This type of coverage applies only to the insured contract. There are many limitations to this policy. It is best for business owners to understand this coverage. It is particularly important in situations where a company could face financial responsibility for the losses created by another company or person.
Here's an example. Let's say a business owns real estate. It rents out that real estate to a third party. It creates a contractual liability insurance plan. This type of business insurance protects the property owner. It transfers the liability with the property to the third party renting the space. This document outlines the responsibilities of that third party.
What You Need to Do
What should you do to minimize risks? Speak to your business insurance agent. Discuss your current general liability insurance plan. Determine how contractual liability impacts your contract and the way your business operates.
Obtaining the proper level of insurance is important in every situation. We will work with you to ensure you have adequate coverage for any risks you face. Do not assume you have proper coverage. This is especially true with contractual liability. Be proactive to minimize financial loss. Call Porter-Brandenburg Agency, Inc. at 972.234.5588 right now. We can help you get a free quote Dallas business insurance.