Does Commercial Insurance Cover Legal Fees?

Depending on the type of policy and the specifics of the claim, commercial insurance policies may pay legal fees and costs. Here are a few typical instances:

General Liability Insurance: This kind of policy offers protection against lawsuits or claims stemming from property damage or bodily injury that your company may cause to third parties. The coverage will often cover your legal defense fees, settlements, or judgments up to the policy limits if you are sued.

Errors & Omissions (E&O) insurance, also referred to as professional liability insurance, offers protection against lawsuits alleging negligence, mistakes, or omissions in the provision of professional services. Your professional liability insurance may pay for legal defense expenses, settlements, or judgments up to the policy limits if a client sues you for damages as a result of an error or failure to deliver the promised service.

Directors and Officers (D&O) Insurance: This kind of policy covers the costs of defending directors and officers in court as well as any financial losses brought on by allegations of wrongdoing, including fraud, violation of fiduciary duty, and mismanagement. Legal defense expenses, settlements, or judgments are often covered by D&O insurance up to the policy limits.

Employment Practices Liability Insurance (EPLI): This kind of policy covers the costs of defending against lawsuits alleging employment-related wrongdoing, such as discrimination, harassment, wrongful termination, or retaliation, as well as financial losses. Up to the policy limits, EPLI typically pays for legal defense expenses, settlements, or awards.

You should carefully check your policy and go over any questions or concerns with your insurance agent because insurance policies contain restrictions and exclusions. For instance, willful acts, illegal activity, or breaking the law could be excluded from coverage under some policies. Additionally, it's possible that the policy limits won't be enough to pay for all legal costs and damages, so it's important to assess your coverage requirements and think about buying higher limits or additional coverage as necessary.

In conclusion, depending on the type of policy and the specifics of the claim, commercial insurance policies may pay legal fees and costs. To make sure you have the right coverage for your business, it's crucial to carefully evaluate your policy. Talk to your insurance agent about your coverage requirements.