Companies constantly look for ways to reduce their risks. In the course of doing business, the company may face possible obligations not currently assessed. Here are some contingent liability insurance examples to see the importance of this policy as part of your risk management plan.
The experts at U.S. Risk states that covering vicarious liability is the purpose of contingent liability insurance. This insurance is part of a specialized risk management plan that helps minimize the company’s liabilities.
Borrowing money from the bank through a loan is one example of potential future liabilities. Say you fund your child’s higher education using an educational loan you took out. When the child fails to make a payment, the liability for the remaining balance falls to you. While this is an example of personal liability, the same holds true for businesses.
Let’s say the business is having some work done, but it remains open to customers during the renovations. Should a customer slip on some drywall left on the ground and be injured, your company could have contingent liability because you hired the contractor.
These are just a couple of contingent liability insurance examples. In some cases, the business attorney may recommend having a policy because a particular outcome seems favorable for the third party. Consider this insurance as one piece of the risk management puzzle.