Contingent Liability Insurance

What Does Contingent Liability Insurance Mean?

Contingent liability insurance protects against potential perils or obligations that may or may not materialize, depending on the outcome of a specific event. Companies often purchase this type of insurance to safeguard against the possibility that such an event could lead to significant financial liabilities.

Insuranceopedia Explains Contingent Liability Insurance

Product warranties and outstanding lawsuits are common examples of contingent liabilities. For instance, if a company that sells various consumer products is sued in a product liability case, it may not know the outcome or the exact amount of losses it could incur. If the case does not go in the company’s favor, contingent liability insurance would protect against substantial losses.