What is the purpose of including legal expenses in a packaged commercial policy?

Including legal expenses in a packaged commercial policy serves a crucial function by covering the costs incurred for legal defense against claims or regulatory actions. Businesses often face various legal challenges, whether they stem from customer disputes, employee-related issues, or compliance with regulations. The associated legal expenses can be significant, potentially causing financial strain on a company.

By incorporating legal expenses into the policy, businesses can ensure that they have the necessary financial support to mount a robust defense when faced with lawsuits or other legal proceedings. This not only helps in protecting their assets but also supports the long-term sustainability of the business by allowing them to address legal issues without the added burden of unexpectedly high out-of-pocket costs. In essence, it provides a safety net that can be vital for business continuity. While customer satisfaction, premium costs, and cash flow can all be influenced by the policy, the primary objective of including legal expenses is to specifically safeguard against the financial risks associated with legal challenges.