If your business performs work or manufactures products that are then sold for use, chances are you could use indirect liability coverage. Also called third-party liability sometimes, this contingent liability insurance policy is designed to protect you from liability exposure when a third party faces losses due to issues like design flaws or substandard workmanship. This coverage can be quite important in the event of an incident like a manufacturing recall, and understanding your exposure starts when you open dialogue with an insurer who really understands contingent coverage.
Contingent Liability vs. General Liability
Many general liability policies carry some contingent coverage, but relying strictly on the coverage in a general policy can be costly. Some business models have no need for extended contingent coverage, but the ones who need it can not afford to go without. General liability policies have limits for each type of liability covered as well as the overall policy, so it is possible to overextend yourself paying for policy maximums that truly protect you in each area. It’s a lot more cost effective to shop for a median coverage option in the general policy, then extend the coverage needed in each area with products like contingent liability insurance. Most businesses only need to extend liability protection in limited directions with this approach, maximizing the cost efficiency of both policies purchased.