Questions & answers · Business insurance
When someone sues a small business, who deals with the insurance company's lawyers, the insurer or the owner?
Business insuranceWho paysChecked Nov 6, 2026
From K.Actuary, founded by Sangmin Kwon, ASA · sources checked 2026-11-06 · Source: Texas Department of Insurance · Commercial general liability insurance · What is commercial general liability insurance? View original ↗
In short
- Business insurance can help pay for a suit.
- Some policies cover claims made in the policy period.
- Ask your insurer who picks the lawyer.
What this means
Business liability insurance is meant for this kind of claim. Texas says commercial general liability insurance protects business owners from claims of injury and damage [1]. The U.S. Small Business Administration lists "defending lawsuits" among the losses this cover protects against [2].
The sources do not say who picks the lawyer. Your policy decides that. Read its defense part and ask the insurer in writing. Some policies are "claims-made." They cover claims reported during the policy period [3].
Check how your policy treats defense costs. In some surplus lines policies, defense costs can count against the limit [4]. Legal bills could use up part of your cover.
Your next step
Tell your insurer about the lawsuit in writing. Send it the court papers. Ask who will defend you and who will pick the lawyer. The sources give no deadline. Your policy may set one.
Check it yourself
Open your policy and read the parts on defense and on duties after a claim. See if it is claims-made or occurrence. The sources do not say who directs the lawyer in your case — "Don't know yet". The sources come from Texas and a federal agency. Your state may differ.
Where this comes from (4)
[1] Texas Department of Insurance · Commercial general liability insurance · What is commercial general liability insurance? · checked 2026-11-06
Commercial General Liability (CGL) insurance protects business owners against claims of liability for bodily injury, property damage, and personal and advertising injury (slander and false advertising).
[2] U.S. Small Business Administration · Get business insurance · Common kinds of business insurance · checked 2026-11-06
This coverage protects against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.
[3] Texas Department of Insurance · Commercial general liability insurance · Claims-made versus occurrence policies · checked 2026-11-06
Claims-made policies cover claims that arise from injury or damage occurring during the policy period and reported to the insurer during the policy period.
[4] Texas Department of Insurance · Commercial general liability insurance · Surplus lines insurers · checked 2026-11-06
Defense costs could be included within the limit of liability, and prior acts or run-off coverage may not be available.
How we found this
We matched your question to 4 official sources, quoted the exact lines, and re-checked each quote against its source on 2026-11-06.
What we don’t know yet
Your own plan or notice may say something different. If your letter cites another rule, send it and we will look again.
Every answer is checked against the official rule it quotes.
Information only — not legal advice. Your plan, insurer or agency decides.
This answer quotes the official sources listed above, with the date we checked them. Your own policy, notice and state rules control. We are not your lawyer or your insurer. We don’t file, argue or negotiate claims for you — you send any letter or form yourself.
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