Contingency Insurance Definition

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Contingency insurance is kind of your back up plan when it comes to making sure that you're protected. Find out about a contingency insurance definition with help from an experienced insurance professional in this free video clip.

Part of the Video Series: Insurance Questions
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Video Transcript

My name is Susan Combs, and today we're going to talk about contingency insurance definition. With contingency insurance it's exactly what it sounds like. It's kind of your back-up plan. It's your plan B. So it's what to happen when something doesn't pay out. So with contingency insurance, what it is, is it's secondary insurance. So if, for example, the primary insurance doesn't pay out, there's your back-up. So a lot of times this is on like say a tenant landlord situation. So you have a tenant that has insurance in place but say there's a loss and the tenants insurance doesn't pay out, the landlord's going to have insurance, bigger insurance, that's going to cover in case there's no payout. Also this can be looked at, say you have, you have a lot of industries and things like that, that work with independent contractors. So those are 1099s. In a perfect world a 1099 is their own business owner and technically they should have their own insurance. But there's real world experience that teaches us that a lot of times those independent contractors do not have insurance. So if, say, you're a company and you have 1099s that are working for you and you sign a contract and the independent contractor does something and somebody, you know, there's a lawsuit that occurs, that 1099 should have their own insurance, but if they don't have insurance, then you, as the employer, have your own insurance that's going to end up paying out on that claim.


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