Business owners in Texas understand the importance of protecting their assets and mitigating risks; however, despite taking preventive measures, accidents, injuries, and disputes can still occur, leading to potential legal liabilities. Understanding general liability insurance claims and business lawsuits in Texas is crucial for business owners to navigate potential legal challenges effectively. Does business insurance cover lawsuits? Our Houston business litigation attorneys at Feldman & Feldman can help business owners gain an understanding of general liability insurance claims when facing legal challenges.
Understanding General Liability Insurance
General liability insurance is a type of commercial insurance coverage designed to protect businesses from financial losses resulting from third-party claims. It pays for damages caused by a company and the cost of a business’s legal defense.
Premises coverage covers the costs associated with bodily injury and property damage that happens on a business’s premises or as a result of business operations. Products coverage applies to bodily injury and property damage that occurs away from a business’s premises and is caused by its products or completed work.
There are typically options that allow business owners to customize their insurance coverage based on their business’s specific and unique needs. They can also add excess liability and umbrella policies to provide higher insurance limits to supplement their general liability coverage.
Common Types of Business Lawsuits
Various types of business legal issues can arise depending on the nature of a business, industry, and specific circumstances. Common types of business lawsuits include the following:
- Contract disputes: These lawsuits involve disagreements over terms, performance, and / or breaches of contract between businesses, clients, suppliers, or employees. They can arise from issues such as non-payment, delivery delays, quality of goods or services, or interpretation of contract terms.
- Employment-related lawsuits: These lawsuits can include allegations of wrongful termination, discrimination, harassment, wage and hour disputes, violations of employment laws or regulations, retaliation, and / or breaches of employment contracts or agreements.
- Intellectual property infringement: Businesses may face lawsuits alleging infringement of intellectual property rights such as patents, trademarks, copyrights, or trade secrets and can include claims of unauthorized use of intellectual property, plagiarism, counterfeiting, or unfair competition.
- Personal injury claims: Businesses can be sued for personal injuries or property damage resulting from accidents, negligence, or unsafe conditions on their premises.
- Product liability: Businesses may face lawsuits alleging injuries or damages caused by defective or dangerous products, which can be based on claims of design defects, manufacturing defects, inadequate warnings, or failure to meet safety standards.
- Tort claims: Tort lawsuits involve allegations of negligence, fraud, misrepresentation, defamation, interference with business relationships, or other wrongful acts that result in harm or damages to another party.
- Regulatory compliance and enforcement actions: Businesses may face lawsuits or legal actions initiated by government agencies or regulatory bodies for alleged violations of laws, regulations, or industry standards, including environmental violations, consumer protection laws, securities regulations, antitrust laws, or workplace safety regulations.
- Class action lawsuits: Businesses may be targeted in class action lawsuits where a group of people collectively sues the business for alleged misconduct, such as false advertising, product defects, securities fraud, or unfair business practices.
- Business dissolution and shareholder disputes: Lawsuits related to business dissolution, shareholder disputes, or corporate governance issues can arise among business partners, shareholders, or members of corporations or partnerships.
- Data breach and privacy lawsuits: Businesses may face lawsuits related to data breaches, cybersecurity incidents, or violations of data privacy laws and can include allegations of negligence in protecting sensitive customer information or unauthorized access to personal data.
Businesses must proactively manage risks, maintain compliance with applicable Texas laws and regulations, and seek legal guidance from an experienced business litigation lawyer to address potential legal issues and mitigate litigation risks. When a business issue does arise and leads to a lawsuit, general liability insurance may help cover the alleged damages.
How General Liability Insurance Works in Texas Business Lawsuits
General liability insurance typically pays for business lawsuits by covering various expenses incurred in defending against claims and covering settlements or judgments up to the policy’s limits. Here is how the general liability insurance process generally works in Texas business claims and lawsuits:
- Legal defense costs: When a lawsuit is filed against a business, general liability insurance will typically cover the costs of legal defense, including attorneys’ fees, court costs, expert witness fees, and other expenses associated with defending the claim. The insurance company will appoint its own lawyer or reimburse a business litigation attorney in Texas to represent the business in the legal proceedings.
- Settlements and judgments: If the lawsuit results in a settlement or judgment against the business, general liability insurance will cover the settlement amount or judgment up to the policy’s limits. This coverage includes payments for damages awarded to the plaintiff, legal fees, and related expenses incurred during the litigation process.
- Investigation and settlement negotiations: General liability insurance may also cover costs associated with investigating the claim, such as gathering evidence, conducting interviews, or hiring consultants or experts to evaluate the case. The insurance company may also negotiate settlements with the claimant on behalf of the business.
- Claims handling process: When a claim or lawsuit is filed, and the business’s owner notifies the insurance company, the insurer will initiate the claims handling process, which involves investigating the claim, evaluating coverage, and determining the appropriate course of action. The insurance company may appoint adjusters, attorneys, and / or other experts to assess the claim and represent the business’s interests.
- Policy limits and deductibles: General liability insurance policies have coverage limits, representing the maximum amount the insurer will pay for covered claims or lawsuits. The business is responsible for paying any deductibles or policy limits that apply before the insurance coverage kicks in, and if the costs of defending against a lawsuit or paying a settlement exceed those limits, the business may be responsible for covering the excess amount.
- Exclusions and limitations: General liability insurance policies may contain exclusions or limitations that specify certain types of claims or damages that are not covered. Business owners should review their insurance policies carefully, understand the coverage terms, and be aware of any exclusions or limitations that may affect their coverage in the event of a lawsuit.
General liability insurance protects businesses facing lawsuits by covering legal defense costs, settlements, and judgments, subject to the policy’s terms and limits. Business owners should maintain adequate insurance coverage, promptly report claims to their insurer, and work closely with their insurance provider and Houston business litigation lawyer to effectively manage and mitigate the risks associated with business lawsuits.
Common Exclusions in General Liability Insurance Policies
General liability insurance policies typically include exclusions that specify certain types of claims, damages, or circumstances not covered by the policy. While specific exclusions can vary depending on the insurance carrier and policy wording, common exclusions found in general liability insurance policies include the following:
- Professional services: General liability insurance typically excludes claims arising from professional services provided by the insured. To cover these risks, businesses that offer professional services usually require specialized professional liability insurance, known as errors and omissions (E&O) insurance.
- Intentional acts: Claims arising from intentional acts or intentional damage caused by the business are typically excluded from coverage. This includes claims of assault, battery, discrimination, harassment, or other willful misconduct.
- Contractual liability: General liability policies often exclude liability assumed under contract unless the liability existed in the absence of the contract. This means that claims arising from contractual obligations, indemnification agreements, or hold harmless agreements may not be covered under the general liability policy.
- Employee injury claims: General liability insurance typically excludes claims for injuries or damages employees suffer during their employment. Specific insurance designed to cover these types of claims is optional in Texas.
- Pollution and environmental liability: Claims arising from pollution, contamination, or environmental damage are typically excluded from general liability policies. Businesses that handle hazardous materials or operate in environmentally sensitive industries may need specialized pollution liability insurance.
- Aircraft, watercraft, and auto liability: General liability policies typically exclude liability arising from the ownership, maintenance, or use of aircraft, watercraft, or automobiles. Businesses that own or operate vehicles or aircraft require separate insurance coverage, such as commercial auto insurance or aircraft liability insurance.
- Employment-related practices: Some general liability policies exclude claims related to employment practices, such as wrongful termination, discrimination, harassment, or violations of employment laws. Businesses may be able to purchase separate employment practices liability insurance (EPLI) to cover these risks.
- Product recalls or product guarantees: Claims arising from product recalls, product guarantees, or warranties are often excluded from general liability policies. Product liability insurance or specialized product recall insurance can cover these risks.
- Damages to property in care, custody, or control: General liability policies may exclude coverage for damage to property in the insured’s care, custody, or control. This exclusion typically applies to property the insured business is responsible for but does not own, such as property on loan or being worked on.
- Fines and penalties: General liability policies usually exclude coverage for fines, penalties, punitive damages, or exemplary damages imposed due to intentional or willful misconduct.
Business owners should carefully review their insurance policies, including any exclusions, limitations, and endorsements, to understand the scope of coverage provided and accurately assess their insurance needs. Depending on their specific risks and exposures, businesses may need additional insurance coverage or specialized policies to fill any coverage gaps and adequately protect their assets and operations.
Our Houston business litigation attorneys can help you determine what policies you may need in addition to general liability insurance.
How to File a General Liability Insurance Claim
The general steps for filing a general liability insurance claim after a business lawsuit in Texas typically include the following:
- Review your policy to understand your coverage, deductibles, coverage limits, exclusions, and requirements for filing a claim.
- Notify your insurance company of the incident immediately or when you become aware of a potential claim.
- Collect and organize any documentation related to the incident and the claim.
- Cooperate with the insurance company by promptly providing requested information or documentation.
- Review and respond to settlement offers from the insurance company to resolve the claim after consulting with your business litigation lawyer.
- Stay informed and follow up with the insurance company as needed to track the progress of your claim.
- Review any final settlement agreement carefully to ensure all terms are accurately reflected and to ensure an understanding of the implications of accepting the settlement.
Seek Guidance from Feldman & Feldman
If you have questions regarding your business’s general liability insurance policy and what it covers in a business lawsuit, contact the Houston business litigation lawyers at Feldman & Feldman. Our experienced legal team can review your insurance policy, investigate your claim, and advise you on the best course of action. Contact us to learn how we can help you protect your assets and the future of your business.