Because of the long string of major corporate scandals and the potential for huge payouts due to shareholder lawsuits, the largest commercial insurance companies are increasing premiums and reducing the amount of liability coverage offered to United States corporations.

Insurance companies are also now insisting that corporations themselves pay a portion of any lawsuit awards or out-of-court settlements.

The New York Times reported that a national real estate management firm had its liability insurance premium jump by 50% this year for coverage that is 30% less than a year ago. In addition, its deductible tripled.

If this trend spreads throughout the insurance industry, smaller businesses could be especially hard hit in attempting to get adequate corporate liability coverage at affordable rates.

Publication date: 09/09/2002