Given the cost of insurance premiums and litigation, you should
strive to obtain the full benefit of your insurance coverage. To do
so, you should know what is required of your insurance carrier when
a claim is made; actively engage with your carrier and work closely
with the attorney retained by your insurance carrier to defend you
during the litigation of a claim; and be aware of your duties,
rights and exposures.
The commercial general liability (CGL) policy available to
contractors is a standard policy developed by the insurance
industry organization Insurance Services Office, Jersey City, N.J.
The insuring agreement in the standard CGL policy says your
insurance carrier has the right and duty to defend you against a
suit seeking bodily injury or property damage and to pay those sums
you become legally obligated to pay as damages because of "bodily
injury" or "property damage." Your insurance carrier may, at its
discretion, investigate any "occurrence" and settle any resulting
claim or suit.
Although policy language may be identical, carriers' obligations
and insureds' rights vary substantially from state to state. The
legal principles and judicial rulings governing insurance coverage
disputes and insurers' obligations are a function of state law and
state court decisions interpreting specific provisions in insurance
policies. As with other contract types, courts examine insurance
policies to determine parties' rights and obligations. If
unambiguous, a provision is given effect as written. Because
insurance policies are written and prescribed by insurance
carriers, ambiguities are construed in the insured's favor.
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