Benjamin Schumacher published an article on commercial liability insurance in Switzerland's leading journal for insurance law (HAVE - Haftung und Versicherung, vol. 1/2020).

General liability insurance for companies is primarily aimed at protecting a company and/or business owner in the event of third-party liability claims brought against the company/business owner. In addition, the scope of cover typically expands to legal expenses associated with a company’s legal defense against liability claims, i.e. coverage for legal defense costs.

The article addresses such clauses providing coverage for legal defense costs, with a particular focus on the question of the statute of limitations. According to the Swiss Federal Supreme Court’s settled case law, the limitation period concerning the insured’s coverage claim for the protection against cost for third-party liability commences upon the end of the underlying liability proceedings. However, with regard to the coverage for legal defense costs provided by general commercial liability insurance, there is no settled case law yet. Some scholars advocate that the limitation period shall already commence upon the company’s first contact with its counsel, regardless of whether or not the underlying liability proceedings have even commenced. As a result, the company’s claim for coverage of legal defense costs could become time-barred before the completion or even the commencement of the underlying liability proceedings. The article rejects this view and puts forward a list of practical suggestions that take into account the specific circumstances in the context of general liability insurance for larger corporations.