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Will Your Insurance Pay if Your Business Loses a Lawsuit?

Posted by John Marshall | Aug 23, 2021 | 0 Comments

If you're facing civil litigation, you might be concerned about what happens if you lose the lawsuit. Does your business insurance cover the costs, or are you responsible for the expenses? Below, we break down when your insurance policy may cover your costs and when it won't.

When an Insurance Policy May Cover Your Lawsuit

Generally, your insurance will cover your losses if the lawsuit falls within the scope of your policy coverage.

For example, you'll be covered for an unsuccessful copyright infringement or bodily injury lawsuit if you have general liability insurance. And if you have professional liability insurance, you're covered if you lose a negligence claim or another lawsuit related to professional errors.

If your insurance policy does cover the lawsuit, it can cover losses such as:

  • attorney fees
  • litigation and associated court costs
  • settlement fees
  • other expenses imposed by the judgment

Since you select your liability coverage when you take out your policy, the exact costs covered may vary.

What Your Insurance Policy Will Not Cover

There are a few occasions when business insurance will not cover your expenses if you lose a lawsuit.

Firstly, not every claim will fall within the scope of your insurance policy, so there's no guarantee your lawsuit will be covered. For example, while a general liability insurance policy may cover a defamation or property damage claim, it won't cover your business if someone brings a professional negligence claim against you.

Secondly, business insurance won't cover illegal activity. So, if a court finds that you broke a state or federal law, it won't cover the costs of the unsuccessful lawsuit. For example, if you lose a sexual harassment lawsuit, your insurer won't cover the costs.

If you're facing a lawsuit and you're worried about costs, consult an experienced civil litigation attorney immediately for advice.

Let John Marshall, Attorney at Law, Help With Your Business Lawsuit

While your insurance policy may cover your legal fees in the event of a lawsuit, this is not always the case. You should contact your insurer to confirm the scope of your policy and what will happen in the event of an unsuccessful lawsuit.

If you're dealing with a business lawsuit and concerned about what happens next, contact John Marshall, Attorney at Law. Our experienced team can advise you on the strengths and weaknesses of your case, and we can explain in more detail what costs you might face. Schedule an appointment by contacting us now.

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