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Understanding the benefits and risks of CGL insurance

On Behalf of | Aug 18, 2021 | Denied Insurance Claims

The purpose of a commercial general liability (CGL) insurance policy is to protect businesses in Oklahoma and elsewhere from medical payments or personal injury, property damage, or advertising injury liability claims. It is an essential part of any business’s ability to function, as the negative impact of a lawsuit is costly and can affect the company’s reputation and future viability.

A CGL policy can protect a company from customer slip-and-fall claims, libel or copyright infringement, wrongful eviction, premises liability claims, liquor liability or pollution liability due to environmental exposures, pollution hazards and clean-up costs.

Unfortunately, when an insurance company denies a CGL claim, it can endanger the business in many ways. Knowing what to do when this happens can help Oklahoma City business owners to effectively mount a response that will either force a settlement or begin a tort action.

First actions after a claim denial

When the insurance company denies business insurance claim, the first steps include carefully reading the notice of denial, which may include:

  • lack of timely notification,
  • injury not covered,
  • suspected fraud,
  • claim over coverage limits,

and review the terms of coverage. In the appeal letter, it is important to state the facts and arguments for coverage according to the policy’s terms. If the insurance company still refuses the claim, it is possible to sue the company.

Litigating a business insurance claim

As insurance is a type of contract, if the insurer refuses to pay a legitimate claim, the insured may sue them in civil court for breach of contract, which in this circumstance is the failure of the insurer to perform its end of the agreement. Along with this action, the litigants may also sue for bad faith denial of insurance.

In this instance, the plaintiff must prove that the insurer lied, ignored the evidence, refused to investigate the claim, or otherwise frustrated the insured’s ability to receive a benefit guaranteed under the insurance policy. As a tort action, this kind of claim allows the litigant to seek punitive damages which may exceed the value of the policy.

When considering options, it is important to be aware of the complexity of this kind of litigation and to understand the detailed terms of the CGL policy before proceeding.