CHAPTER 27Insurance and ItsRelationship toIndemnification
Insurance coverage transfers financial risk from seller’s company to the insurance company for a small, monthly premium, provided the claim falls within the terms and conditions of the insurance policy. For example, while painting a building, an earthquake violently shakes the scaffold a painter is standing on, throwing him to the ground, where he suffers a concussion and a torn tendon in his leg. Given that his injuries were no fault of his own, his company’s comprehensive insurance policy pays all but the deductible for the medical expenses.
However, insurance will not typically cover a company for gross negligence. Gross negligence is defined as reckless action without regard to life, ...
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