How the General Liability Policy Works

How the General Liability Policy Works

The Insurance

This article will discuss on how the contractors’ general liability policy works. Contractors have the insurance to cover damages from accidents and mistakes on job sites just like medical doctors who have the malpractice insurance covering damages from an accident or mistakes in the treatment of a patient. Contractors need protection in their business where accidents frequently happen.

It is known as the contractors’ general liability policy insurance. As protection, contractors carry the general liability insurance to shield themselves from the associated costs of disasters. Industrial accidents are often expensive. It can also involve clients, employees, and even bystanders on job sites. This insurance provides extensive protection that includes contractor’s employee mistakes. (Pls. see other Understanding the Contractors General Liability Policy)

How claim begins

Before going into business and starting their first job, contractors purchase the contractors general liability policy insurance. The insurance premiums can be paid on a regular basis, some are monthly and some are yearly.

If an accident happens, the contractor immediately reports the incident to his insurance company and files a claim. The filing would entail filling out a form to provide any information available at the time, including police reports, pertinent hospital records and the victim’s contact information. The insurance agent submits the claim form to the claims department where investigation begins.

The Process of the Insurance Investigation

All the aspects of the incident are reviewed and recorded during the investigation. The insurance investigator is also known as the claim adjuster. He or she will interview witnesses and everyone involved in the incident while collecting and recording information. Sometimes, the adjuster may take measurements where it happened or can ask witnesses to recreate the scene of accident. Once completed all pertinent information, the adjuster prepares and submits a report of the accident to the insurance company’s legal department.

The Review and Decision Making

The insurance legal department is generally composed of lawyers, if not of legal experience and educational backgrounds. The review would entail in depth analysis along with all of the physical evidence collected by the adjuster. A decision would be made after determining who is at fault for the accident or mistake. This department is also task to decide on the payment or nonpayment of hospital bills, repairs, damages, and legal fees.

Basically, decisions are made relying on the fault of the accident. Payment can be made if fault is found on the contractor where such incidents are fully covered under the policy. However, if the victim, client, or another third party would be at fault, the legal department has two options. It can opt to pay the claim and take the person at fault to court to recoup the money paid. The legal department may also opt to deny the claim and decide not to pay.

The Outcome of Claim Denials

If claim is denied by the insurance company, the contractor can always file for an appeal. The appeal will be processed and reviewed by the legal department before it reaches final judgment. If denial is the final outcome, a lawsuit can follow. The lawsuit is designed to force the insurance company to pay the claim through the court. The lawsuit may last for several years and prove to be expensive for the claimant and the contractor.

Meantime, the contractor can be sued as well by the victim or claimant. However, the contractor’s general liability insurance pays for legal fees and provides an attorney for the contractor. This special service is always included in the general liability policies.

The contractors’ general liability policy works can fully protect the contractor against lawsuits and losses working in an industry where accidents frequently happen.