Commercial general liability (CGL) insurance is supposed to protect your business when things go sideways. Whether it’s a lawsuit, claim, or demand from a third party, these policies are meant to give business owners peace of mind. But what happens when the insurance company you’ve been paying premiums to refuses to do its job?
That’s exactly what played out in a recent case here in San Diego, where a company was forced into a legal battle just to get the coverage for which it had already paid. In the end, they recovered $5.18 million, but it didn’t come without a fight.
A Cautionary Tale from Right Here in San Diego
The business in this case had a standard CGL policy in place. When a covered incident occurred, they filed a claim expecting their insurance company to step in. Instead, the insurer denied the claim—and refused to provide a legal defense.
The problem is that under California law, insurers typically have a duty to defend their policyholders when there is even a possibility that the claim could be covered. Refusing to do so doesn’t just leave a business vulnerable, it could qualify as insurance bad faith.
The company fought back and ultimately secured a multimillion-dollar award. It’s a win, but it’s also a reminder that policyholders can’t afford to be passive when it comes to their insurance coverage.
What This Means for Your Business
If you’re a contractor, developer, or commercial property owner in San Diego, this case is a reminder to take a proactive approach to your insurance coverage. It’s critical to understand what your policy does (and doesn’t) cover. Many business owners don’t review the fine print until a claim is denied, but knowing your exclusions, endorsements, and responsibilities upfront can save you from nasty surprises later.
If your insurer denies a claim or refuses to provide a defense, don’t assume that’s the end of the road. Many denials are based on narrow interpretations of policy language, and a second opinion from an attorney can often turn things around.
It’s also important to watch bad faith tactics. Delays, vague responses, and unreasonably low settlement offers may signal that your insurer isn’t acting in good faith, and that’s something you can fight back against.
Finally, when it comes to potential claims, documentation is everything. Keep thorough records of all communication with your insurer, expenses related to the incident, and any supporting contracts or reports. A strong paper trail can make all the difference if your claim is disputed.
Has Your Insurer Let You Down?
Business insurance is meant to be a safety net, not another battle to fight when you’re already dealing with a loss. Unfortunately, as this case shows, sometimes getting your insurer to do the right thing takes legal pressure.
If your commercial general liability claim was denied, delayed, or handled improperly, we’re here to help. We represent policyholders, not insurers, and we know how to hold carriers accountable when they don’t deliver.