As a business owner, you are responsible for everything that goes on in your business, even if it means an employee or a contractor you hired created a disaster. Contingent liabilities are the incidents that occur outside your scope of direct control but yet you and the business are financially responsible for. No matter what kind of safety policies you put in place or how thoroughly you stress care and quality in daily operation, you can still find yourself being sued for someone’s mistake.
Same Coverage, Different Name
Contingent liability insurance is a way to protect your company from the financial fallout of dealing with employee, contractor, or agent error. It might also be referred to as vicarious liability or indirect liability. Regardless of what name it goes by, the premise of liability means you are legally responsible for another person’s poor work or wrongdoing according to the workings of legal relationships. Employees are generally the biggest risk with vicarious liability, and whether or not they were abiding by company policies, their actions are pinned on the company.
Should a customer decide to sue your company, you could be looking at thousands and upwards of million dollars in legal fees, lost productivity, settlement costs, and reputation management efforts. An insurance plan addressing vicarious liability helps offset these costs, keeping your business from going under.