Claims and Premiums
When you purchase general liability insurance, you get the ultimate benefit and that benefit is financial protection against claims that may be filed against you. Those that don't have the necessary financial protection are those that go out of business. They have to sell business assets in order to satisfy the damages that they are to pay.
With general liability insurance, you are always prepared for the worst to happen. Even if the worst never happens, having the protection in place brings about peace of mind. Plus, there are some instances in which others will not do business with you unless you are insured. This is true for businesses working for other businesses. Being insured is the fast and easy way to establish who is liable for what.
The premium that you pay for your general liability insurance is not much at all. When you compare the annual cost to that of a personal injury settlement or other claim, the premium is so minimal. For instance, one of your employees may have hit a visitor with a piece of machinery. That individual had their foot crushed and this has resulted in them having surgery and extensive physical therapy.
Between all of the doctor appointments, the surgery, the physical therapy, and any wages lost as a result of that person not being able to work, you could be held liable for a lot. By keeping up with your premiums and ensuring you have enough coverage, you can make sure your insurance company will pay the damages and medical expenses.
When Claims are Filed
When claims are filed against you, you may receive documentation from another entity that there has been a personal injury, advertising injury or another type of injury that another says you have inflicted upon them. When you receive this notification, it is time for you to take action. The first step is notifying your insurance company.
The insurance company is going to start their process with the first step being information gathering. They will want to know who the witnesses are, what they saw, if there is any other proof that the accident occurred. Keep in mind, however, that the attorney the injured party hired felt strong enough that their client had a case that they pursued the process. Most personal injury attorneys don't get paid unless their clients do, so they don't take a risk unless they see a potential for earning. This means that the insurance company is going to work hard.
The insurance company wants to pay out as little as possible. This is something that is difficult to do if the claim is one that is completely valid. Nevertheless, there are those claims that tend to have no merit and then the insurance company doesn't have to pay anything on the claim. The burden of proof mainly lies on the shoulders of the one making the claim.
When the insurance company does not have to pay on a claim, this means the premium for the insured does not have to go up. It is not uncommon for the premium to increase when a claim has been settled. The insurer has to offset the amount in some way and they do this by increasing the premium.
Keep in mind, though, that with you running a business, you may have more than one claim through time. If you have individuals in and out of your doors constantly, there is always that risk that something will occur. Every person entering your business or coming in contact with your business operations is a potential risk, so make sure you know how claims and premiums work.