Many companies are quick to purchase general or business liability insurance when they begin operations, as owners and operators can usually recognize the primary threats of loss and liability they could potentially face. However, there are indirect areas of exposure that are often overlooked, making contingent liability insurance a much needed but often ignored coverage policy.

Two Areas of Concern

This form of indirect liability goes by different names, with contingent and vicarious being two other common terms used to define the risk. Put simply, these terms mean that your company is can be held legally responsible for another person’s (employee or contracted labor) poor work or wrongdoing. According to the professionals at U.S. Risk Insurance, there are two areas that impact contingent liability claims.

• If the liability is to be transferred to your business, the employee must be acting in accordance with their job duties. Even if they have broken the rules or failed to follow instructions, if an accident happens due to something they have done, your business can be found liability.
• Contract Labor. Hiring an independent contractor does not relieve your company of legal responsibilities in the event of an accident. Only work with a contractor who is licensed and insured to help minimize the risk in this area.

Protecting your company from these risks is best done with a supplemental contingency coverage. With insurance, a wise investment is to have too much rather than not enough.