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Quote of the Day - Lord, defend me from my friends; I can account for my enemies. - Charles D'Hericault
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Does Your Insurance Policy Cover Your Business Contracts?

You're in business, and you've probably signed a contract or two or three that requires you or your company to indemnify someone else or another company  The indemnity contract goes something like this:  sure, I'll buy your product or service, but if something goes wrong or someone gets hurt, you will defend and indemnify me if I get sued.

But will your insurance company stand behind your promise?  At least for the non-profit Heritage Housing Development, Inc., Westport Insurance Corporation won't.  Heritage issued bonds to raise funds, and then apparently defaulted on repaying those bonds.  Heritage and members of its Board of Directors were sued, and they turned the claim over to Westport, which denied coverage.

Westport's policy specifically excluded coverage for contractual indemnity, so it was able to defeat Heritage's claim for coverage. 

Your policy, however, may include coverage for business contracts, surprisingly enough, and you may not have ever thought to submit a claim to your carrier when you're required to defend and indemnify someone else.  Check your policy carefully and talk to your insurance broker.  You may be required to list the specific contracts you enter into.  But when a lawsuit comes, you may be grateful you did your homework. 

The directors of Heritage Housing probably wish they had.

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Friday, October 06, 2006 at 13:59 Comments Closed (0) |
 
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