It may also include some limited coverage for things like libel,
slander and other specific causes of loss. It is important to read your policy carefully, especially the exclusions.
business owner.
These policies are written to cover a broad range of business risks but also carry exclusions that could be
important to your business. All policies are not created equal. There is simply no substitute for reading and
understanding the policy. Your agent should be able to help you understand what is covered and what is not.
If you are a manufacturer, you need Product Liability coverage. Should you have any doubt about this, I would
encourage you to visit any retail store and read the warning labels on products on the shelf. Many of the
warnings sound silly.
A group called The Michigan Lawsuit Abuse Watch (M-Law) annually published a list of
crazy warning labels. Last year's winners included a toilet brush with the warning "Do not use for personal
hygiene." The point is that each of these crazy warnings came about because somebody sued the manufacturer
of the product (perhaps even a lot of somebodys). Juries can award huge judgments against manufacturers even
if there was blatant misuse of a product. Your Product Liability coverage will protect you.
When all other policy limits have been exhausted, your Umbrella Policy will cover any additional judgments, up
to the policy limits. Because they usually require you to carry large limits on your other policies, like $500,000
or even $1 million, umbrella policies tend to be relatively inexpensive for the amount of coverage they provide.
This is because it is rare for any lawsuit to reach $500,000. Given their nature, umbrella policies tend to offer
very broad coverage, but as with any other insurance, read the policy carefully.
Different types of liability coverage have developed over the years do address specific business needs. When
buying a liability policy, you should be aware that there are two types of coverage, occurrence coverage and
claims-made coverage. Occurrence coverage is more expensive but covers you based on when the loss
happened, even if it was many years ago. Claims-made coverage only covers you while the policy is in force
and the claim is made. With occurrence coverage, as long as you always have some policy in force, you will not
have gaps in coverage. With a claims-made policy, it is possible to have gaps when you have not coverage in
force. Purchase an occurrence policy unless you have no other choice.
