Duties of Insured under Commercial Liability Insurance

Commercial liability insurance provides businesses with protection against financial losses resulting from legal claimsmade against them for bodily injury, property damage, or other liabilities that may arise from their operations. However, obtaining a commercial liability insurance policy is only half the battle. The insured also owns certain duties that they must fulfil to ensure that they receive the full benefits of their policy.

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Duties of Insured under Commercial Liability Insurance

Duty to Notify

The first duty of the insured under commercial liability insurance is to notify the insurance company promptly of any potential claims or lawsuits that may arise. This duty extends to all employees, agents, or other representatives of the insured who become aware of the potential claim or lawsuit. The insured should provide the insurance company with all relevant information and documents regarding the claim or lawsuit.

Duty to Cooperate

The second duty of the insured under commercial liability insurance must cooperate fully with the insurance company in the investigation and defence of any claims or lawsuits. This duty includes providing the insurance company with access to all relevant information and documents, as well as participating in any legal proceedings related to the claim or lawsuit.

Duty to Mitigate

The insured must take reasonable steps to mitigate any damages that may arise from a potential claim or lawsuit. This duty includes taking steps to prevent further harm from occurring and taking steps to minimize the financial impact of the claim or lawsuit.

Duty to Pay Premiums

The insured has an obligation under the duties of insured under commercial liability insurance to pay all premiums due under the commercial liability insurance policy. Failure to pay premiums may result in the cancellation of the policy, which could leave the insured unprotected in the event of a claim or lawsuit.

Duty to Disclose

The insured must disclose all relevant information to the insurance company while applying for the commercial liability policy. Failure to disclose relevant information could result in the policy being voided, which could leave the insured unprotected in the event of a claim or lawsuit.

Case study

Here is the case study on the duties of the insured under commercial liability insurance.

Factual Background

ABC Company is a small business that provides landscaping services to residential and commercial clients. The company has a commercial liability insurance policy to protect itself from potential liability claims.

One day, while ABC Company was working on a client's property, an employee accidentally damaged a neighbour’s fence. The neighbour filed a liability claim against ABC Company for the cost of repairing the fence.

Upon receiving notice of the claim, ABC Company promptly reported it to its insurance provider and provided all relevant information, including the date and location of the incident and the names and contact information of any witnesses.

The insurance provider conducted an investigation and determined that the damage was covered under ABC Company's commercial liability insurance policy. The insurance provider offered to settle the claim with the neighbour for the cost of repairing the fence, which ABC Company agreed to.

Duties

As part of its duties under the commercial liability insurance policy, ABC Company cooperated fully with the insurance provider's investigation and provided all necessary information and documentation. Additionally, ABC Company complied with any reasonable requests from the insurance provider during the claims process.

Furthermore, ABC Company took steps to mitigate the damages by promptly offering to pay for the cost of repairing the fence. This helped to minimize any potential liability exposure for the company.

Resolution

In summary, the duties of an insured under commercial liability insurance include promptly reporting any potential claims, cooperating fully with the insurance provider's investigation, and taking steps to mitigate damages. By fulfilling these duties, ABC Company was able to successfully navigate the claims process and minimize its liability exposure.

Conclusion

The duties of the insured under commercial liability insurance have to cooperate with the insurer, report claims promptly, and not make any admissions of liability. They must also pay any deductibles, comply with policy conditions, and notify the insurer of any changes that may affect coverage.

Written By: PolicyBazaar - Updated: 01 April 2023
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