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Three More Things You Didn’t Know About Liability Insurance

Three More Things You Didn’t Know About Liability Insurance

There is a large insurance company with some quirky commercials that likes to use the phrase “When it comes to insurance, what you don’t know CAN hurt you.”  They aren’t wrong.  Insurance policies can sometimes include clauses or conditions that can limit your insurance coverage. At Hayes Brokers, we’re here to help by bringing some of these limitations to light.  As part of our ongoing series, here are three more things you didn’t know about General Liability Insurance.   Where Are Your Defense Costs? When it comes to claims, you will most often here about the big check paid to a plaintiff.  That is often not the only check written on a claim.  An even bigger payout can come in the form of attorney and trial fees, otherwise known as defense costs. Defense costs can be applied to your policy in one of two ways: Inside the limits.  This means that the defense costs come out of the policy limit.  If your per occurrence limit is $1,000,000 and your insurance company spends $400,000 in defense costs and pays out $800,000 to the plaintiff, the total claim amount would be $1,200,000.  Your per occurrence limit would be exhausted and the additional $200,000 would come out of your own pocket. Outside the limits.  This means that defense costs are picked up by the insurance company and do not erode your policy limit.  Any settlement to a plaintiff or claimant still lowers your policy limit.   Most insurance companies prefer policies with costs inside the limit, but some do offer the costs outside endorsement.   Be aware that defense costs outside the limit...