What is Liability Insurance?
You know you need insurance to protect your business, but all the different choices leave you asking “what?” Is liability insurance a good choice for you? Learn more.
Every business owner knows the amount of blood, sweat, tears, and money that go in to running a successful enterprise. Many consider their businesses to be their babies and invest incredible amounts of time and energy into their growth.
So why do some entrepreneurs opt to go into business without proper insurance?
Some like to convince themselves that nothing bad is going to happen—and if it does, they will deal with it then. Others research what they need, but when they get to something they don’t completely understand, they think “What is liability insurance, anyway? I just don’t have the time to figure this out right now.”
It’s important to make the time, however. A little research and preparation can go a long way when it comes to the success or failure of a business. In this blog, we’ll break down what liability insurance is, what it covers, how much you need, and why it’s important.
Answering the question: What is liability insurance?
You may have come across liability insurance when buying your auto insurance policy, but commercial general business liability insurance is going to be what you need for your business. Liability insurance protects your assets if someone is injured on your property or if there is property damage or injury caused by you or your employees. Other situations generally covered by liability insurance include:
Legal costs if an injured party tries to sue you. This could cover out-of-court settlements, attorney fees, medical expenses, and the insurance company’s investigation.
Claims of false or misleading advertising. For example, if your company unknowingly violates another entity’s copyright or is accused of libel or slander.
Property damage inflicted by you or your employees in a building that you rent.
So, what isn’t covered by general liability insurance?
Professional errors, like if a client sues because of negligence, violation of good faith, a major mistake, or misrepresentation.
Employees injured on the job.
Intentional acts. For example, if one of your employees assaults and injures a customer.
Auto accidents.
It is possible to have those types of incidents covered by insurance, but you need to speak with your insurance agent about other insurance options like workers compensation insurance, professional liability insurance, and auto insurance.
How to figure out how much liability insurance coverage you need?
If you own a business, you need liability insurance. However, the amount of coverage is going to depend on the type of industry you work in, where you live, and the amount of protection you need. If you are perceived to be a high-risk business, such as a construction company, you’re going to need more coverage than, say, a tiny accounting office.
The best way to figure out how much liability insurance coverage your business requires is to speak with your insurance agent. They will be able to take your unique situation into account and provide a quote that ensures you have the exact coverage you need—not too much or too little.
If you don’t need a lot of liability insurance or you’re not a very high-risk business, you may want to ask your insurance agent about a Business Owner’s Policy (BOP). A BOP packages together various policies business owners may need—like liability insurance—and can generally offer lower premiums since you are bundling everything together with the same company.
On the other hand, if you are a higher-risk business, your insurance agent may mention umbrella insurance. No, it has nothing to do with actual umbrellas—it’s extra insurance to protect you from major claims that may max out your original liability insurance policy. Umbrella insurance helps protect you from having to pay out-of-pocket if the entire claim cost goes above and beyond what you’re insured for.
It’s more than worth it to work through your policy with an experienced insurance agent so you’ll have a full understanding if you’re ever confronted with a situation in which you need to file a claim. General business liability insurance may only set you back around $1,000 every year, but it could save you from a million-dollar lawsuit that could make your company go bankrupt. It’s much better to be safe than sorry when you have so much on the line!
Protect your hard work with liability insurance
Many people like a little risk in their lives—it’s fun to live on the edge sometimes, right? That’s all well and good, but if you’re a business owner, going without liability insurance is definitely one risk you shouldn’t even think about taking. You’ve devoted far too much of your time, effort, and money to gamble it all away, so get in touch with your insurance agent as soon as possible to learn about your options.
Are you mid-way through the development of a mixed-use property? Starting a new business? Unsure of all your insurance needs? Give your Hugh F. Miller Insurance agent a call or request an appointment online.
Are there any other types of insurance that have been invaluable to the success of your business? Share your thoughts in the comments!
Source: “What is Liability Insurance?” from Pekin Insurance Blog, January 2015