Insured Definition

The "Legal-Ease" Glossary
Insured

This refers to a person or organization covered by insurance. The insured is indemnified – secured against harm, loss, or legal responsibility – by their insurance policy or policies. Your business is the "insured" party in its insurance policies.

So say your business is insured by a General Liability Insurance policy. That means your insurance provider – the entity that issued the policy – pays for legal expenses when a third party sues your business over…

  • Premises liability (i.e., when someone is injured on your commercial property).
  • Property damage (e.g., you accidentally spill coffee on a client’s laptop).
  • Advertising injury (e.g., copyright infringement).

If you aren’t insured, your legal defense expenses, settlements or judgments, and other court costs would have to come out of your business’s funds – or worse, your own pocket. But being insured means those financial burdens belong to your provider. In exchange for that protection, you pay a premium for the coverage and a deductible – the amount you pay toward the claim before your benefits kick in.

Sometimes, your client contracts will require that your business be insured in some capacity. If you offer professional services, for example, a client might want to see your Certificate of Liability Insurance for proof of your Errors & Omissions coverage. If you rent commercial real estate, your landlord will often require you to have General Liability coverage as part of your lease requirements.

That’s why being properly insured is usually a key ingredient for running a successful business. It signifies that your business is ready to take financial responsibility for its actions (or lack of action), which lends credibility in the marketplace.

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