Having the right kind of insurance protects your business if something were to happen to a customer, employee, or another third party. But when multiple parties are involved in a workplace incident, which insurance carrier covers the costs? It all comes down to who’s liable, or at fault, for the incident and what their insurance policy covers.
Here's what business owners need to know about liability claims, including how to file a claim and best practices for a smooth and effective claims management process.
What Is a Liability Claim?
A liability claim is a request for compensation from your insurance company to pay for expenses related to an incident in which the policyholder is at fault. For example, in the case of a car accident, the driver who caused the accident would be considered liable and their car insurance company would be financially responsible for it.
Business insurance is no different. If a third party suffers damages as a result of your actions or negligence, your liability insurance would cover any financial losses up to your policy limit.
Liability insurance claims tend to fall into one of two categories:
Bodily injury
Bodily injury claims involve incidents in which a claimant experienced physical harm. If an employee gets hurt while operating machinery or a customer slips and falls in your parking lot, they could file a bodily injury claim against your organization. Your liability insurance policy would step in to cover their medical bills and related expenses.
Bodily injury differs from personal injury, which pertains to non-physical damages such as emotional distress, but both may be covered by your insurance policy.
Likewise, workers’ compensation is not considered a liability claim, because it applies even to no-fault incidents and doesn’t require proof of responsibility or negligence.
Property damage
Property damage claims involve situations in which no one was hurt, but a third party experienced property loss or damage. For example, if the equipment in your factory malfunctions and damages the small business next door, your commercial general liability insurance should cover it.
Similarly, if your delivery driver knocks over a customer’s mailbox while delivering a package, your commercial auto insurance policy would cover it.
Remember, liability insurance only covers harm to third parties, so you’ll need to get additional commercial insurance to cover damage to your own premises.
Types of Liability Claims
Bodily injury vs. property damage is just one way to categorize a liability claim. You’ll also have to consider which of the following types of policies it falls under:
General liability
A general liability claim is a claim for loss or injury that's unrelated to a specific business activity. This could be a slip-and-fall incident on your premises or accidental damage to a customer’s property. Keep in mind that general liability insurance coverage may not be as comprehensive as more specific business insurance categories.
Product liability
Product liability insurance covers damage or injury related to a specific product. This includes scenarios such as contamination, mislabeling, malfunction, or product defects. Although your general liability policy may also cover these incidents, a product liability policy may provide more protection or have higher coverage limits.
Professional liability
Professional liability insurance, sometimes referred to as errors and omissions (E&O) insurance, covers mistakes made in a professional capacity. If a financial services firm gives bad advice or mismanages a client’s money, E&O insurance would cover things like settlements, court costs, and legal fees.
What Is the Lifecycle of a Liability Claim?
Liability claims go through a multi-step process from submission to payout, just like any other type of insurance claim. Here are the four key steps you’ll need to navigate:
1. Submission
The first step in the life cycle of a claim is to submit the claim to your insurance provider. Your insurance carrier may provide a liability claim form to streamline the process. Since a liability claim always involves a third party, they may need to participate in the process of filing a claim and submitting a first notice of loss (FNOL) to your insurer.
If the claim relates to a workplace injury or accident, then you may also need to submit an accident report to your state’s workplace safety authority.
2. Investigation
Next, your insurance carrier will investigate the claim. They may need to visit the site of the incident, interview any witnesses, and review photos or video evidence.
You can cover your bases by conducting a thorough workplace investigation and storing any relevant evidence in an incident management platform like Pulpstream.
3. Adjudication
Once you’ve provided all of the necessary information, an insurance adjuster will review it to determine whether the incident is covered by your policy and by how much.
This step may include reviewing medical bills or getting an estimate of repair costs. The faster you respond to your insurance adjuster, the faster the case will be resolved.
4. Settlement
During the settlement process, the insurance company approves or denies the claim. If it’s approved, they’ll make an offer to the claimant regarding the payout amount.
The claimant may accept the payout or negotiate with the insurance company to arrive at a satisfactory outcome. Ideally, you’ll avoid having to take the matter to court.
Liability Claims Management
Processing a liability claim can take months and complex cases can involve a lengthy back-and-forth between multiple parties. The more liability claims that your business has to deal with, the harder it is to keep track of them all.
When you use a claims management solution like Pulpstream, you can resolve claims faster by tracking them all in one centralized, cloud-based portal.
Here are four benefits of using a claims administration platform to streamline liability insurance claims:
1. Automatic report generation
First, make it easy for employees to initiate a liability claim from any location or device, including Android, iOS, or the web. You can even use Pulpstream to generate OSHA reports automatically so you can report workplace incidents promptly.
2. A central view of each claim
Next, ensure the best outcome for each claim by overseeing it individually and tracking where it’s at in the claims life cycle. Upload photos, emails, and other attachments so you have all of the supporting evidence you need at your fingertips.
3. Insurance adjuster communications
Facilitate interactions with stakeholders by using a claims management platform with built-in claim notifications and insurance adjuster communications. By responding to messages promptly, you’ll avoid delays and help to resolve cases more quickly.
4. Built-in reporting and claims analytics
Finally, use claims analytics to improve decision-making and risk management. View insurance claims by month, type, age group, and tenure to identify patterns in your claims data and reduce the risk of fraud and workplace safety incidents.
Track Business Liability Claims with Pulpstream
Maintaining liability insurance will protect you from financial loss in cases of bodily injury or property damage when your business is at fault. Liability claims may be covered by your general liability, product liability, or professional liability insurance policy — but each one has its own considerations and coverage limits.
By filing and tracking business insurance claims in a claims management system, you can resolve cases faster and achieve the best outcome for your business.
Pulpstream’s claims management platform supports general liability, product liability, workers’ compensation, auto insurance claims, and more. Generate incident reports, streamline insurance adjuster communications, and view claims analytics all in one centralized, cloud-based platform.
Request a demo today to see how it works for yourself!
