Every day you conduct your business in the face of many potential liabilities. No matter how hard you try to avoid them, these liabilities can adversely affect your company’s finances unless you have
business liability insurance to protect you. While some liabilities are caused directly by the actions of your business in providing a service or product, those aren’t the only kinds of liabilities you are exposed to. Sometimes, incidents outside your direct purview could result in a liability claim.
Indirect and Contingent Liability
If the actions and activities of others related to your business could result in damages, then you may need indirect and contingent liability. Indirect and contingent liability covers the activities of your employees, subcontractors, agents, contractors and other representatives if they cause damage to others while conducting business for your company.
The major difference between traditional commercial or business liability and indirect contingent is that with direct liability, your business has done something, possibly preventable, to cause harm for one’s body or property another. With indirect and contingent liability your business hasn’t done anything directly, but someone representing it has.
It is much more difficult to predict and protect yourself against these indirect liabilities because they may be related to activities that you have no real control over. For instance, let’s say that you hire a contractor to hang your new sign up outside your business. They subcontract the job out to another company but remain on-site to supervise the process. As the sign is getting hung, the subcontractor’s equipment fails and your sign falls onto the car of a patron of a store across the street. Technically, this isn’t your fault. You hired an experienced and licensed contractor and you expected them to do their job—which they did. But because it is your sign being hung the injured party can sue you for damages. If they are successful, then the money must come out of your business unless you have indirect and contingent liability to protect you.
This unpredictability and difficult to control nature of indirect claims makes it even more vital that you have the proper insurance protection. Don’t get caught by surprise with a lawsuit and no way to cover the resulting expenses.
Learn more about business insurance including types of coverage and factors that affect your insurance premium. Contact us to get free auto insurance quote at (817) 626-3339.