Jane Dotson
Supplementary payments are extra costs that an insurance company covers beyond the main liability coverage. These include legal fees, bail bonds, and travel expenses related to a claim. They are covered only in connection with claims the insurer investigates or settles, or suits it defends. Supplementary payments are an integral part of the insurance policy, protecting the insured during legal defense or claims investigations without reducing the core policy limits. Most general liability and auto liability policies include them, but coverage can vary depending on the terms and conditions of the insurance policy.
| Characteristics | Values |
|---|---|
| Definition | Supplementary payments are extra costs an insurance company covers beyond the main liability coverage. |
| Coverage | Most general liability and auto liability policies include supplementary payments. |
| Examples | Legal fees, bail bonds, travel expenses, court costs, and interest on the full amount of any judgment against the insured. |
| Purpose | To protect the insured during legal defense or claims investigations and to cover the expenses incurred by the insurer in conducting the investigation and defending the insured. |
| Limitations | Supplementary payments only apply to legal costs that an insurer has specifically approved. They do not cover expenses incurred by the insured without the insurer's approval. |
| Variation | Some insurers include broad supplementary payment clauses, while others set specific limits or exclusions. |
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What You'll Learn
Legal fees
Supplementary payments are a term used in liability policies for the costs associated with the investigation and resolution of claims. They are extra costs that an insurance company covers beyond the main liability coverage. These payments help protect the insured during legal defence or claims investigations, without reducing the core policy limits.
Supplementary payments will cover the insurer's expenses to investigate claims and defend the insured or their business against a lawsuit. This includes hiring an investigator to examine a claim or retaining an attorney to prepare the legal defence. It also covers all reasonable expenses incurred by the insured at the insurance company's request to assist in the investigation or defence of the claim or lawsuit, such as lost earnings due to time off from work.
In the case of a lost court case, some court costs will be covered by supplementary payments. However, if the court awards attorney's fees and expenses to the opposing party, these expenses may not always be covered by the supplementary payments provision. Some policies do cover these fees and expenses, while others consider them damages that will be paid out of the policy limits of the insurance.
It is important to note that supplementary payments only apply to legal costs that an insurer has specifically approved. If an insured individual pursues legal action on their own, those costs will not be covered by supplementary payments.
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Court costs
Supplementary payments are extra costs covered by an insurance company beyond the main liability coverage. They are intended to protect the insured during legal defence or claims investigations without reducing the core policy limits. These payments are usually related to miscellaneous costs associated with legal issues. Supplementary payments in the context of court costs may include:
Attorney's Fees
Attorney's fees may be considered as either damages or supplementary payments, depending on the policy. If the plaintiff in a lawsuit wins the case and the court requires you to pay the plaintiff's attorney's fees, these fees are considered damages and are subject to the policy limit. On the other hand, if the insurance company provides an attorney for your defence, their fees may be covered as supplementary payments.
Court-Related Travel Expenses
Supplementary payments may cover reasonable travel expenses incurred by the insured at the insurer's request when assisting in the defence of a claim or participating in court proceedings.
Forensic Examinations and Specialist Costs
If your defence counsel requests a forensic examination or the hiring of a specialist as part of the claims investigation, these costs may qualify as "`reasonable expenses'" covered by supplementary payments.
Lost Earnings Due to Court Appearances
If you are requested by your attorney or the court to take time off work to participate in a deposition, hearing, or other court-related matter, supplementary payments may cover your lost earnings for the day.
Bail Bonds
Supplementary payments may cover bail bonds required due to accidents or traffic law violations arising from the use of a vehicle covered for bodily injury liability. For example, if an employee leaves the scene of a traffic accident involving a company vehicle, the insurer may pay for their bail bond.
It is important to carefully review your insurance policy or consult with your insurance provider to understand what specific costs are included as supplementary payments, as the scope of coverage can vary between different insurers and policies.
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Travel expenses
Supplementary payments are costs that an insurance company covers beyond the main liability coverage. They are typically associated with the investigation and resolution of claims, including defence expenses. These payments are made to an insured individual and are usually related to legal costs that the insurer has specifically approved.
Supplementary payments for travel expenses can help to ensure that the insured individual is not burdened with unexpected costs when dealing with a claim. These payments can provide financial support to the policyholder throughout the claims process, ensuring they are adequately protected beyond the primary coverage of their insurance policy.
It is important to note that the inclusion of travel expenses in supplementary payments may vary depending on the insurance provider and the specific policy. Some policies may have specific limits or exclusions, so it is always advisable to carefully review the policy or speak to the insurance provider to clarify what is covered.
By providing supplementary payments for travel expenses, insurance companies can assist policyholders in managing the financial burden associated with legal proceedings or claims investigations. This support can be crucial in ensuring that individuals can actively participate in the legal process without being hindered by additional travel-related costs.
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Bail bonds
Supplementary payments are extra costs that an insurance company covers beyond the main liability coverage. These include legal fees, bail bonds, and travel expenses related to a claim. Most liability insurance policies contain supplementary payments sections, including the standard Business Auto Policy (BAP), Personal Auto Policy (PAP), and General Liability Policy.
The General Liability Policy, for instance, states that the insurer will pay up to $250 for the cost of bail bonds required due to an accident. The Business Auto Policy, on the other hand, will pay up to $2,000. These policies also cover the cost of bonds to release attachments, where a bond is used to dissolve an attachment of property. It is important to note that the insurer is not responsible for applying for or providing the bail bonds or release bonds.
Supplementary payments for bail bonds can also be relevant in situations involving accidents or traffic law violations related to vehicles. For instance, if an employee damages a guest's car while parking it, there may be a requirement for a bail bond due to the accident or traffic violation. In such cases, the CGL Policy's Supplementary Payments section can provide coverage for the cost of the bail bond.
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Prejudgment interest
Supplementary payments are a term used in liability policies for the costs associated with the investigation and resolution of claims. These payments are covered only in connection with claims the insurer investigates or settles, or suits it defends. Supplementary payments are insurance payments that cover various expenses associated with your defense. For example, if a customer claims that they became sick from eating a sandwich at your restaurant and demands compensation for bodily injury, your insurer will investigate the claim to determine its validity. If the customer files a lawsuit, your insurer will provide an attorney to defend you, and the expenses incurred will be covered under supplementary payments.
The calculation of prejudgment interest varies depending on the jurisdiction and factors such as local laws and prevailing interest rates. For example, federal prejudgment interest rates are variable, while New York State has a fixed rate of 9%. The type of case and the certainty of the monetary damages can also influence whether prejudgment interest can be claimed and collected. Under California law, for instance, a person entitled to recover damages that are certain or capable of being made certain by calculation is also entitled to recover interest from the day the right to recover vests in them.
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Frequently asked questions
Supplementary payments are extra costs an insurance company covers beyond the main liability coverage. These include legal fees, bail bonds, and travel expenses related to a claim.
Some examples of costs covered by supplementary payments include attorney's fees, court costs, and the actual loss of earnings by the insured.
Supplementary payments are covered only in connection with claims the insurer investigates, settles, or defends. These payments help protect the insured during legal defense or claims investigations without reducing the core policy limits.
Most general liability and auto liability policies include supplementary payments, but coverage can vary depending on the insurer and the specific policy.
