Business Bodily Injury Liability
Are you protected in the event something bad happens?
Most businesses have, at a minimum, a General Liability insurance policy. And, many of those policies have liability limits for bodily injury liability and property damage liability. The difference is probably fairly obvious- bodily injury liability includes any incident where someone is injured or worse and property damage liability covers the rest. Or, do they?
As with any insurance policy, your coverage is determined by the insurance carrier’s perceived risk. The costs of your various insurance policies are a combination of the industry that you are in, the size of your company and how much coverage you want.The one other factor, as you may know, is how much of a claim you are willing to pay out-of-pocket. This is commonly known as your deductible.
Workers who are injured on the job are rarely if ever covered by a bodily injury liability policy since worker injuries have their own insurance - workers’ compensation coverage. But, like all insurance policies, bodily injury liability coverage has lots of twists and turns within the insurance policy itself.
Collection of yellow hard hats.
At the simple end of a bodily injury liability policy, there might be a slightly higher or lower cost if you have all your interactions with the insurance carrier online. The insurance carrier can reduce the number of customer service agents available to answer your phone call and, therefore, pass that savings on to your business. The maximum amount that will be paid for any and all claims during the policy period is also up to you. State laws vary in coverage limits. You’ll also be able to decide if your bodily injury liability coverage covers all of your company’s operations, just operations involving vehicles or both.
Things get a bit more complex at the other end. This is where you have to start thinking about what your coverage actually includes or doesn’t include. The insurance company certainly has, and they will note the types of claims that aren’t available as part of your coverage.
If you opt only to have bodily injury liability coverage for your worksite and don’t also have a commercial vehicle insurance policy that includes coverage for bodily injury, your entire company could be at risk in the event of a car accident.
And, you’ll want to make sure that your policies include underinsured motorist coverage and uninsured motorist coverage, at a minimum. The opposite is also true. Your commercial vehicle insurance policy might not cover bodily injury that happens on your job site. Also, your liability could wipe out your cash reserves without under or uninsured motorist coverage.
Obviously, no one hopes for or really even expects a lawsuit or claim for bodily injury. You can try to rely on an insurance agent for help, but they tend to have a narrow view focused on fitting your company into their existing policies. On the other hand, if you work with a broker like us, you gain a partner who isn’t solely aligned with any one insurance carrier; instead of focusing on you and your business, then finding the insurance carriers who best meet your needs.
With all of our clients, we work with you to clearly understand your business and to ensure that there are no “blind spots” in your insurance coverages while also hitting your deductible and limit goals.
Property damage liability tends to be fairly clear when it comes to claims. Once a building, tool, piece of equipment or other item is replaced or repaired, the claim is generally closed.With bodily injury liability, however, claims can remain open for months, years, decades or a lifetime and the insurance carrier is factoring this possibility into their insurance cost.
There is another exclusion that’s dependent on the situation and it’s not affected by whether or not you have a commercial vehicle insurance policy or not. In the case where an employee is involved in an accident on their way to work or on their way home while driving their personal vehicle or where they injure someone else, this type of lawsuit and/or claim is covered by the employee’s personal vehicle insurance policy.
However, if the same employee is operating a company vehicle, this claim is likely to fall to the bodily injury component of your insurance policies.
Probably most frustrating to business owners is where there is an accident where an employee is involved but the accident is caused by an underinsured or uninsured motorist. Even though fault has been established, nothing will likely be gained by filing a lawsuit against the uninsured motorist.
In the case of the underinsured motorist, your insurance carrier will at least find relief in whatever coverage the other party does have and will have to provide coverage for the balance.
“Bodily injury and property damage coverage provides protection against losses from the legal liability of insureds for bodily injury or property damage to others arising out of non-professional negligent acts or for liability arising out of their premises or business operations”
With the rising cost of vehicle repair and replacement and the rising cost of medical bills associated with bodily injury claims, the cumulative cost can surprise you. And lost wages and/or damage to other assets beyond the vehicle can radically increase the potential losses.
And, should a lawsuit continue to trial, there’s always the possibility that the other party can be awarded additional financial damages for pain and suffering. Jury trials are tricky and expensive and determining who caused the bodily injury falls to 12 people who you have never met.
These are scenarios where understanding your coverage limits are so important. You don’t want to carry too much insurance for bodily injury liability, but you also don’t want any claim to exceed the coverage that you do have.
Group of Construction workers talking.
And, they also explain the potentially high cost to protect you and your company from bodily injury liability.
Many states have moved personal vehicle insurance to a “no-fault” standard where it doesn’t matter who caused an accident. Drivers are expected to maintain a minimum amount of insurance for bodily injury liability and property damage liability. However, this shift often doesn’t transfer to commercial bodily injury liability coverage and may actually make the premiums for bodily injury higher than in states where “no-fault” doesn’t exist.
Since we’re talking about the rules for different states, you’ll also want to confirm that your insurance policy coverages apply in any state versus only in your business’s home state.
When we work with you, we’ll make sure that you understand any and all exclusions that are outlined, especially in your bodily injury coverage, because the potential losses are so highly unpredictable.You can offset some of your premium cost with high deductibles.
You can also decide to self-insure for certain types of bodily injury claims. States have rules under which a business can self-insure, including the cash reserves that are required to be set aside and not used for other business purposes.A hybrid of this can be found by establishing a minimum claim amount that triggers your coverage. For example, you can establish, in some states, that you will pay any claim up to a certain dollar amount, out-of-pocket. Claims above that amount are covered by your bodily injury liability policies.
But, be cautious with this option. As we mentioned earlier, bodily injury lawsuits have components including actual medical expenses, lost wages and more.
As hard as you may try, you’ll have a hard time visualizing all of the possible scenarios that could result in a bodily injury liability lawsuit. On the lighter side, Farmers’ Insurance has an ongoing series of commercials showing some of the unusual claims that it has reportedly covered. While often funny, these oddball claims are anything but humorous if you discover that they fall into an exclusion that’s outlined in your bodily injury liability policy.
To summarize, no one wants to see someone injured in an accident, in a vehicle or on the job site.
Workers who are injured on the job are covered by workers’ compensation insurance, not bodily injury liability coverage.
Bodily injury liability only covers injuries or worse. Property damage liability covers virtually everything else.
All bodily injury liability coverage MUST include under- and uninsured motorist coverage.
Your willingness to pay expenses out-of-pocket can reduce your bodily injury liability policy cost.
Depending on the state, you may be able to self-insure for claims up to a certain threshold.
In every case, you need a partner with your business’s best interest front and center. As a broker, we can focus on your business’s needs and find the correct coverage(s) for you at the best possible cost. Let’s chat.