Shutting Down Your Insurance

certificatesac.jpg

closing down Question - How should you go about shutting down your insurance?:

I’m closing down my business. Will I need to continue any kind of insurance coverage to protect myself and my employees from future lawsuits?

Answer:

That’s an excellent question and we applaud your concern for yourself, your family and your employees.

Businesses that make or build or fix things have a continuing need for special liability insurance coverage even after the business shuts down. This coverage is called “discontinued products and completed operations liability” and it protects you and your employees against lawsuits arising out of injury or damage caused by the products you made or the work you completed while you were in business.

But wait! You purchased commercial general liability insurance for years – including products and completed operations liability –while you were making or building or fixing things. If something happens after you shut down, why won’t the policy that was in effect when the product was made or the work was done cover the resulting injury or damage?

The CGL policy does not cover bodily injury and property damage unless the injury or damage occurs while the policy is in effect. It doesn’t matter when you manufactured the product or completed the work. The only thing that matters is when someone is injured or some property is damaged because of your product or your work. A liability insurance policy must be in force when that happens.

If you are closing your business, ask your insurance agent about the availability and cost of “discontinued products and completed operations liability insurance.” There are laws – called “statutes of repose” – that dictate how long you may be legally liable for injury or damage caused by your work or products, and thus how long you may need to carry such insurance.

If you operated your business as a corporation or some other form of limited-liability entity, you may want to ask your attorney about whether you or your employees can be sued personally for accidents caused by your work or products after the business shuts down and the entity is dissolved.

Swingle, Collins & Associates specializes in business liability insurance coverage The descriptions of coverages listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your coverage needs for business liability insurance please contact your dedicated risk manager to discuss the benefits and services of insurance coverage.

The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverages, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.