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Home · Blog · INSURANCE AND REINSURANCE CLAIM GUIDE : Overview of Business and Personal Insurance

Insureds and insurers should thoroughly analyze coverage, damages, and related issues at the inception of the claim process or as soon as an event occurs. For the insured, when there has been a potentially insured loss, it is vital to promptly determine the existence and scope of coverage and to provide notice of claim to the insurer as soon as possible. For a business or individual, insurance can cover both first party and third party losses. A first party loss is a loss to the insured’s property which the insured’s own insurance is covers. A third party loss is a loss the insured causes which results in damage to a third party (i.e. another person or company.

Examples of first party coverage are property insurance which insures a building or vehicle. If there is damage to the property of the insured, the coverage will typically protect the insured so long as the damage was caused by an “insured peril” or “cause of loss” and is not subject to an exclusion. The policy will describe the nature of the property that is insured and may have sub-limits for different types of coverage. Business insurance policies also may provide coverage for damages such as business interruption or lost profits, and it is important to analyze the potential coverage for these types of losses when an insured event such as a fire or flood occurs.

Individuals commonly procure first party insurance coverage in the form of homeowners or renters insurance or comprehensive and collision coverage on their automobiles. Like business insurance, the personal insurance will describe the property that it insures and may contain various sub-limits for different types of property (such as the contents of a home) or different causes of loss (such as sewer backup or sump pump failure). Another form of personal first party insurance coverage is underinsured or uninsured (UM/UIM) coverage which is a type of an automobile insurance policy. UM/UIM coverage can protect the insured for bodily injury, medical bills, or property damage that an uninsured or underinsured driver causes; it also may cover a hit and run driver whose insurance is unknown. Insurance companies and brokers often include numerous types of coverage in standard policies which insureds do not pay attention to or focus on when they purchase the insurance. Accordingly, when there is a loss, many people do not realize what type of coverage they have, and it is important to examine your insurance and consult with legal counsel when a loss occurs to understand the scope of coverage that may apply.
For businesses, third party insurance typically comes in the form or general liability insurance and may include a primary policy and an excess, or umbrella, policy. Other examples of third party business insurance are directors and officers insurance (D&O), errors and omissions insurance (E&O), and professional liability insurance. Each of these types of insurance protects a company or its employees, owners, officers, or directors when the company is alleged to have caused damage to another company or person. If a third party makes a claim for damages or files a lawsuit, it is important to promptly review your insurance coverage and provide notice to your insurer. Most policies contain a “duty to defend” which requires the insurer to hire legal counsel to defend a lawsuit. Depending on the specific policy language, the insured company or person may have a right to choose its legal counsel. The costs of defense may be included in the limit of liability or could be treated as a supplemental payment that is in addition to the liability limit.

Individuals also purchase third party insurance coverage, oftentimes combined with first party coverage. For example, an automobile, homeowners, or renters policy will also typically provide separate coverage for liability claims. If a person is injured in a home or in an automobile accident, the liability insurance will provide a defense and will pay damages up to the stated limit. Because large, unanticipated losses are not uncommon, it is important to purchase adequate liability limits or an umbrella policy to protect against a potential claim.
Depending on an individual’s underwriting and loss history (i.e. have there been prior claims), and how high the underlying automobile or homeowners limit is, an umbrella policy may be obtained for a relatively low amount of premium. In the event of a loss, this additional coverage could be vital in protecting the insured’s personal assets. Because medical bills and damages can easily exceed $500,000 when a third party slips and falls at a home, or is injured in a car accident, such coverage is essential and a value.
Robertson and Ash represents insureds and insurers in coverage disputes and lawsuits. If you or your company have sustained a loss or have been threatened with a claim or litigation, contact the law firm of Robertson and Ash to analyze your coverage and protect your rights.

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