With the current pandemic situation, there have been about 777 lawsuits filed against corporations, insurance companies, and governments because of the pandemic-based work situation.
As a business owner, you have probably heard of liability insurance, and if your business is large enough, you may have already purchased it. But liability insurance is very general—do you know what is insured under this coverage? It’s more important now as a business owner to educate yourself on liabilities and what you can do to protect yourself—even if you already have the coverage.
Liability insurance policies protect your business if an employee, client, or company files a lawsuit against you. For example, your employee may not be adequately trained and may neglect to mention directions for using a product, which leads to the client’s injury of various forms.
Even if it’s a small mistake caused by your businesses, such as an open pothole or a broken light, if that affects someone somehow, they can file a claim against you. Now that you’ve got your answer to ‘what is business liability insurance coverage,’ you should also understand the four primary forms and why it is needed.
1. General Liability
- What It Covers – It covers claims relating to the damage done to customers, clients, or others, and their property, when your business, equipment, or employees are at fault. It will protect you whether or not the harm was accidental or intentional. Fees related to medical instances, property damage, advertising injuries, and reputational damage all fall under this coverage. A lawsuit is not always required for general liability claims.
- Who Needs Coverage – Small business owners can get the coverage they need for medical and legal expenses in the event of a lawsuit. However, even larger businesses may benefit from it, particularly when it comes to libel or slander. Many clients may also require a certificate of insurance before signing contracts.
2. Professional Liability
- What It Covers – Professional liability insurance covers medical expenses and legal fees for lawsuits that arise from negligence, omission, or malpractice in a business.
- Who Needs Coverage – Professionals who need to uphold the standards of care such as medical experts, architects, and computer consultants, among others. However, it can protect your business from claims relating to negligence and misrepresentation, which general insurance may not cover.
3. Product Liability
- What It Covers – It covers medical expenses and legal fees that arise from lawsuits about defective products sold by businesses.
- Who Needs Coverage – Manufacturers, designers, wholesalers, and retailers. Anyone with a small or large business that is part of a product supply chain can benefit from having this insurance policy. It Defects can arise through any part of the process, and this policy covers lawsuit damages so that it doesn’t break your business.
4. Employer Liability
- What It Covers – It includes expenses that aren’t covered by a workers’ compensation policy. The latter may cover medical costs and wages to an extent but may not provide a more significant sum of lost wages for a severe injury. You can also use it to pay for the legal costs if an employee sues for discrimination and wrongful termination.
- Who Needs Coverage – All businesses that have workers’ compensation should pair employer’s liability insurance with it. While the former covers medical expenses, the latter can protect you if you face lawsuits from employees.
When running a business, it can be challenging to work out which policies you need, what they should include, and it can be challenging to manage all of them. BOPs are business owner policies that are pre-made specifically to insure businesses. The package consists of three insurance policies—property insurance, liability insurance, and business interruption insurance.
Many business owners prefer to choose a BOP because it covers property and liabilities and is cost-effective compared to purchasing them both separately. You can also tailor these packages according to your needs for workers’ compensation, terrorism insurance, health and disability, and cyber insurance, among a few.
Additional Liability Coverage
Here are a few other forms of liability insurance to consider:
- Commercial Umbrella Liability Coverage – It provides extra coverage beyond the limits of your general liability insurance policy. Rather than paying out of your pocket, this policy can cover legal and medical expenses beyond your standard policy restrictions.
- Director and Officer Liability – This insurance policy protects directors and officers’ personal possessions and their spouses if competitors, investors, employees, or other parties sue them on the grounds of a wrongful act when managing a business.
- Indemnity Insurance – This is a contract signed by two parties where one agrees to provide compensation for the expenses or damages that the second party faces. If one is at fault for negligence or misjudgment, they will need to compensate the other.
Make A Choice That Benefits Your Business
There are plenty of policies to choose from when it comes to protecting your business. You can also be uninsured, but that will only cost you plenty of money during a lawsuit that may run your business into the ground. Ankin Law Office can provide further advice.
Now that you’ve understood the options that you have, you can choose one or more policies to protect your business. You can also pick package deals to cut costs, protect your business, and keep your business growing.