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Understanding Contingent Liability

Navigating the various kinds of liability insurance available to your business can be confusing. General liability covers just about everything, so shouldn’t that be enough? The fast answer is no, and it’s not a good idea to just buy more general liability coverage if you only face additional exposure along one line of liability. Since general policies tend to have a cap overall and for each type of liability covered, additional coverage that suits your unique business risk profile is often a good idea, and that’s what contingent liability insurance policies offer to businesses who need them.

What Is Contingent Liability?

Often called indirect liability or 3rd party liability, this avenue of risk is essentially when you bear liability for possible damages to a third party as a result of work your business does. The three terms are interchangeable, so if you have an existing 3rd party liability policy, it’s essentially the same coverage. Depending on your business’s operations, you could have just a little exposure in this area or it could be one of the biggest avenues of risk you face, which is why it is typically included in general liability and sold on its own as an extended policy as well. If you’re not sure whether you have enough coverage in your general liability policy, it’s a good idea to have a professional walk you through your exposure so you can buy the coverage needed to fully protect your business.