A customer slip-and-fall liability claim, step by step, through renewal

This is a hypothetical composite. The business, the customer, the lawyers and every dollar figure are invented to show how a general liability claim moves; this is not a real case, and the amounts are not typical settlements. The mechanics follow the standard ISO commercial general liability form (CG 00 01); carrier forms and state law differ, and the state where the fall happens controls fault rules and filing deadlines.

A slip-and-fall claim usually looks small for the first few weeks and then is not. The sequence is predictable: report it, preserve the evidence, let the insurer investigate and take over the defense, resist the urge to talk to the other side, and expect the claim to sit on your loss history for years even after it closes.

The business and the policy

Say a bakery-café with 14 employees leases a storefront. It carries a commercial general liability policy with $1 million per occurrence and a $2 million aggregate, $5,000 of medical payments (Coverage C), and no deductible on bodily injury. A cleaning contractor mops the floors each evening and again at 2 p.m. under a written service agreement that makes the café an additional insured on the contractor's own liability policy and has the contractor indemnify the café for its negligence.

Timeline

Step 1: what the first hours should look like

Treat an injury on your premises as a claim from the moment it happens. Help the person, call for medical help if there is any doubt, and write down facts: time, place, what the floor looked like, who saw it, the weather, the mat condition, the last inspection. Photograph the area before it is cleaned. Preserve camera footage, because many systems overwrite in days. Do not discuss fault, speculate about the cause, or promise to pay anything. "I'm sorry you were hurt" is fine; "that spot is always slippery" is a statement that comes back in a deposition.

Then report promptly. A late report is the single most avoidable coverage problem in this line. Whether a late notice defeats coverage depends on policy wording and state law, and some states require the insurer to show it was harmed by the delay, but you do not want to test that. The business insurance claim checklist and how to file a business insurance claim, step by step cover the mechanics.

Step 2: medical payments

Coverage C of CG 00 01 pays reasonable medical expenses for bodily injury caused by an accident on your premises, regardless of fault, if the expenses are incurred and reported within one year of the accident. It is meant to settle small injuries quickly and reduce the chance of a suit. It does not apply to your employees or to certain other categories, such as people regularly residing on the premises, and the limit is small. Paying it is not an admission of liability. Here the $5,000 limit was exhausted within two weeks, which told the carrier the injury was not minor. See premises liability: how slip-and-fall claims are handled for how the fault side works.

Step 3: investigation and the reserve

The adjuster works to answer four questions: what condition caused the fall, did the business create it or have notice of it (and for how long), what did the customer do, and what are the damages? Many states require the plaintiff to prove the owner knew or should have known of the hazard; the cleaning log and the video showing the floor had been wet for 40 minutes cut against the café. Under comparative fault rules, which differ by state, the customer's footwear or phone use could reduce recovery or in a few states bar it. See workers' comp and benefits requirements by state for your state.

The carrier set an initial reserve of $25,000 and raised it as the medical picture grew. Reserves are the carrier's estimate, not an offer, but they are what an underwriter sees later.

Step 4: reservation of rights and the duty to defend

When the attorney's demand added punitive damages, the carrier sent a reservation of rights letter. That is routine. It says the insurer is defending but is preserving defenses: here, that punitive damages are not covered in many states and that any award above the limit is the café's responsibility. The duty to defend under the CGL is broad. It extends to any suit alleging covered bodily injury, even if the allegations are weak, and defense costs are paid in addition to the limit as supplementary payments until the limit is used up by a settlement or judgment. In some states, such as California, a serious conflict created by the reservation can entitle the insured to independent counsel at the insurer's expense.

Step 5: tendering to the contractor

The service agreement was the café's second source of money. The carrier tendered the claim, asking the contractor's insurer to defend and indemnify the café as an additional insured and under the contract's indemnity clause. Additional insured coverage depends on the exact endorsement and the contractor's own negligence, so the response was partial, and the contractor's carrier ultimately funded $60,000. If the café had not asked for the certificate and the endorsement at signing, there would have been nothing to tender. See tendering a claim to another party's insurer.

Step 6: settlement

Under the standard CGL the insurer may investigate and settle any claim or suit as it considers appropriate. Unlike some professional liability policies, there is no consent requirement, which is why you should not negotiate on your own. At mediation the plaintiff's demand fell from $410,000 to $185,000 once the video, the contractor's share and the lack of any surgery were weighed. Because the claimant was over 65, the carrier verified Medicare's interest and reported the settlement as required, since Medicare is entitled to reimbursement of what it paid. A release and dismissal ended the case. If the café's insurer later learns a third party was at fault, it may pursue subrogation against that party.

Step 7: loss runs and renewal

A closed claim does not disappear. The loss runs: what they are and how to request them the next carrier requests will show the date of loss, claimant, status, paid indemnity, paid expense, medical payments and any open reserve. This one would read as closed with roughly $168,000 incurred, and underwriters look at frequency, severity and the cause of loss. Premium impact depends on the account's size, class, other claims and the carrier's appetite, so no one can honestly promise a number; see do claims raise business insurance premiums?. Order loss runs 60 to 90 days before renewal, check that closed claims carry zero reserve, and prepare a short note on what changed: a new mat program, a documented inspection schedule and a revised contractor agreement.

What this business did right and wrong

Right: it documented the scene, saved the footage, reported the next morning, forwarded the lawyer's letter without replying, and had a written contractor agreement with additional insured status and indemnity. Those four things cut its share of the payout by roughly a third.

Wrong: the cleaning log showed the floor wet for 40 minutes with no caution sign out, and the café had no inspection routine of its own. It relied on the contractor for a hazard it still owned. It also never confirmed that the contractor's additional insured endorsement was actually issued until the claim; verifying it at onboarding would have removed a month of back and forth.

Key takeaways

• Report any injury the next business day, and never discuss fault or payment with the injured person or their lawyer.
• Medical payments coverage is no-fault and small; it can head off a suit, but it does not cap what the claim can become.
• A reservation of rights letter is normal and tells you which losses may fall on you, such as punitive damages or amounts above limits.
• Contractor agreements with additional insured status and indemnity are a second pot of money, but only if you collect the endorsements before the loss.
• Closed claims still appear on your loss runs; review them before every renewal.