Having a contingency plan essentially means that you have a backup plan prepared in case things don’t turn out the way you hoped or expected. Contingent liability insurance is pretty similar. It’s a type of insurance policy that covers a specific kind of risk, a risk that may or may not happen. If it does happen, though, you’ll have coverage. If this sounds vague or confusing, you’re not alone. You can contact U.S. Risk Insurance for clarity and additional information, but you can also keep reading.
How Does it Work?
Companies will try to create an estimate of how much it would cost if an incident were to occur. Then they set that amount aside so it can be used if needed. If the risk is low they may not set aside the whole amount needed. Agencies can decide how much they set aside.
Contingent Liability Example
One example is educational loans. Some parents take out loans for their child to attend college but stipulate that they must start paying it back after they graduate. What if they don’t graduate? Or perhaps they just decide to not pay it back.
There are a few other instances where you might want to consider contingent coverage. Some of them include:
- Construction projects
- Potential lawsuits
- Ongoing Investigations
- Product warranties
Again, it might not be necessary, but you could be very glad you have a policy if the need arises.