Businesses rely on commercial general liability coverage for protection from legal liability arising from bodily injury or property damage to a third-party. Classic examples of third-party actions include a customer who slips and falls, or a consumer who is injured by a product. Companies can generally expect that their commercial liability policy will cover medical expenses, legal fees, a claim settlement, or a legal judgment, but there are other issues that a company may not fully grasp until after a claim is filed. Standard policy language in a commercial general liability policy states that the insurer “will have the right and duty to defend the insured against any suit seeking those damages.” While this language may seem straightforward, we have represented clients who have found that it can be just the opposite.
Our attorneys have seen claims made to insurance companies denied when the claim relates to an environmental investigation brought by the Environmental Protection Agency. The denials were based on the argument that the action was an agency proceeding, and not technically a legal “suit” as the insurance policy language states. Our experience was key in helping the companies ensure that as action by the EPA progressed beyond a mere investigation, coverage was available because the interpretation of the word “suit” was met.
We have also handled insurance issues that centered on the meaning of the insurer’s “right” to defend to the suit. Many companies never consider that insurance policy language might give the insurance company the right to choose an attorney for the company and control how a lawsuit is handled. Disputes can arise between businesses and insurance companies over this control, and our attorneys have handled numerous cases to successful resolution through mediation or arbitration, ensuring that a result in the best interests of the businesses involved was achieved.
They key to avoiding these types of disputes of seemingly trivial language is to consult an attorney well-versed in insurance coverage language before purchasing your insurance policy. The up front costs will significantly outweigh the future pitfalls that could result from unfavorable policy language, and ensure that you do not find yourself in coverage disputes or litigation.