Get All Details: Liabilities Of Insurance Companies
Insurance companies are legally bound to meet the financial obligations of their customers. This means that they must be able to pay claims when they are due and have enough cash on hand to do so.
While we all like to think that Liabilities of Insurance Companies have huge reserves of cash at their disposal, this is not always the case. You see, insurance companies often face unexpected circumstances that can put a strain on their finances and make it difficult for them to pay claims in a timely manner.
Liabilities of Insurance Companies
Liabilities are the obligations of an insurance company. This can be in the form of money, goods or services. Liabilities can be classified into two types:
- Legal Liabilities – These are obligations to pay damages as per law in case of any event that may occur to a customer during his/her tenure with the insurance company and is not covered under any other type of liability mentioned below.
- Contractual Liabilities – These are contractually committed financial responsibilities related to either product or service provided by an insurance company to its customers
There are a number of liabilities that insurance companies can face. Your policy will cover expenses from these types of Public Liability Insurance, but only if the claim is valid and the amount falls within your policy’s limits.
- Liabilities imposed by law include:
- Claims related to accidents with injuries or property damage attributable to an act or omission by you
- Legal liabilities arising out of the operation or use of your car, such as bodily injury liability, property damage liability and personal injury protection (PIP) coverage claims.
Contractual liability is incurred when the insurance company fails to honour a claim that has been made under its policies or contracts.
The insured may seek compensation for non-payment of insurance benefits or compensation for any other losses resulting from the breach of contract by the insurer. Liability for claims can arise from errors in issuing a policy, errors in processing claims and errors in handling policy terminations.
The insured may be entitled to compensation for any losses suffered due to the errors. Errors in issuing policies can include an insurer failing to issue a policy at all, issuing a policy with incorrect information or making an error in calculating the premium payable. Errors in processing claims can include the insurer paying out less than what is due under its policies (for example, where there are discrepancies between medical bills and insurance payments).
How can a professional help you?
A professional will help you to understand the market and the competition, as well as your own business. This is vital information for any industry; however, it can be especially important in insurance.
Insurance is a very competitive space, so knowing what your competitors are up to and why they’ve chosen certain strategies will give you an advantage when it comes time to make decisions about pricing or expansion tactics.
With so many liabilities, Liabilities of Insurance Companies have to be careful with how they handle certain situations. When it comes down to it, you don’t want your insurance company to be sued for anything! If you run into any issues with your policy or coverage, contact a professional who can help guide you through the process.