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If Your Business is Sued,
Your Insurance Policy Can
Save You Lots of Money.

by Liz Bradley

Too many business owners fail to take advantage of a tool that potentially could save them many thousands of dollars after they have been sued. That tool is your commercial liability insurance policy.

If you have such a policy, you may be entitled to have your insurer pay for the attorneys’ fees and costs required to defend a lawsuit suit against you. It is therefore important that your policies be reviewed to determine whether or not they apply to the facts that are related to the lawsuit.

To maximize the chances that you will obtain the benefits your insurance policy may provide, you need to avoid the following common mistakes that business owners (and their lawyers) make:

Don’t assume that the policy couldn’t possibly relate to your lawsuit.

Some policies provided extended coverage; your policy may therefore apply to lawsuits relating to advertising injury, personal injury, including libel, invasion of privacy, and wrongful eviction and potentially others.

Notify your insurance company promptly of the law suit.

It is essential that you follow the policy’s instructions precisely. Sometimes, you can trigger the obligation to defend your lawsuit by sending a cover letter to the insurance company enclosing a copy of the lawsuit. Be sure to keep a copy of everything you send your insurer. Time is definitely of the essence. You must put your carrier on notice of the lawsuit immediately, since in California you only have 30 days to respond if the law suit was given to you personally. If the lawsuit was mailed to you, a different deadline might apply; nonetheless, notify your insurer immediately.

If your insurance company says it doesn’t have to defend that lawsuit that was filed against you, don’t automatically take no for an answer.

The insurance company’s decision not to defend your lawsuit may or may not be correct. Sometimes, the defense is denied because the insurer does not have sufficient facts. Other times, they may deny claims because the issue is questionable. Incredibly, sometimes claims are denied wrongfully, without a valid reason. In that case, you may need to sue and get a court to order the insurance company to defend the law suit that was filed against you.

You should therefore not accept the insurance company’s decision refusing to defend your lawsuit with getting independent advice.

For more information on commercial liability insurance coverage and other types of insurance law, contact us.
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April 6, 2006
Elizabeth Bradley will be speaking at
The Beverly Hills Bar Association
Nuts & Bolts Seminar on Entertainment Law
“Reality Television” to be webcast on
West LegalEd.
BRADLEY & BRADLEY, LLP, 5900 Wilshire Blvd. Suite 2600, Los Angeles, CA 90038310-499-5603Fax: 310-499-5613info@twobradleys.com

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