Posted by Nhatvi in Business liability insurance is a must-have for all businesses. Even if you run a small operation (e.g., bed and breakfast, pet sitting service, house cleaning service, local newspaper), you need to have liability insurance for your business.
Liability insurance covers injuries and damages suffered by a third party. Do not expect to collect from any claim against it. Liability insurance is meant to pay for any obligations you might incur in case someone gets hurt while he or she is on your business property or when there are property damages or injuries caused by you or your employees.
Not a few people have commented that doing business in America is like working in a legal minefield where even minor issues or senseless disputes end up in lawsuits. You may have read about the millions of dollars ruled in favor of plaintiffs. If you don’t want to risk everything you have worked for, you need to protect yourself and your business from any possible legal threat.
Types of Liability Insurance
Ideally, you should have liability insurance in place before you launch your small business. Remember, anything can happen or go wrong anytime, anywhere. Consult with your insurance agent for the appropriate policy and coverage you need. There are basically four types of liability insurance:
1. General Liability Insurance
This is the most common and offers a broad coverage of protection against lawsuits arising from auto accidents involving your business vehicles, property damage, or injuries to anyone anywhere you’re doing business such as when someone trips on your tripod if you’re a photographer or if your waiter burns a guest with the flambé he’s carrying. Some liability coverage may include libel, slander, and infringement on intellectual property. (You’ll definitely need this if you run a freelance writing business from home.)
2. Professional Liability Insurance
This type of liability insurance is for those who are in the service industry. It covers errors made during the performance of a service such as the malpractice insurance for doctors, and errors and omissions insurance for financial advisors, lawyers, accountants. and other professionals.
3. Product Liability Insurance
This type of liability insurance is for business owners who are in the manufacturing industry. It provides protection against accident, injury, or death that may be blamed to any product you manufacture or develop. Its coverage is best appreciated by toy producers and car manufacturers.
4. Employers’ Liability Insurance
This liability insurance protects you from possible lawsuits your employees might file against your business because of injuries or sickness or for wrongful termination, sexual harassment, and discrimination.
Occurrence Policy vs. Claims-Made Policy
Go online to find the best rates for your business liability insurance. If you wish, you can use an aggregator service to receive multiple quotes from different insurance companies so you can easily compare and make an educated decision. As you go about shopping, you will notice that the rates for a claims-made policy are lower than the rates for an occurrence policy. Don’t merely go for the cheaper premium; learn more about the package you are getting instead.
The occurrence policy is more expensive than the claims-made policy because you remain protected long after your policy lapses. As long as the incident occurred while the policy was in force, any claim against you for that incident will have to be paid by the insurance company regardless of the time of filing. This means that if you get sued three years from now for an incident that happened today, your current insurance will answer for any financial settlement that may be ruled against you in the future even if you have switched to a new insurer by then.
The claims-made policy, on the other hand, provides protection only from incidents that occur during the term of the policy and for which claims must be made within the same time period or for the duration that you are insured with the same insurance company without lapse or gap of coverage.
Related Posts
It is a risky bet for any small businesses not to have a liability Insurance coverage, no matter how small revenue a business owner can generate from his /her enterprise, it is always a wise choice for that business to have the protection of liability insurance to cover on any possible damages claims and injuries lawsuits arise from workplace accident or faulty product suffer by second party.
Liability coverage come in many packages and forms, it is always a good policy for business owner to evaluate his business needs and purchase the necessary coverage protection for himself and business alike.
Excellent Article by writer. I want to add something here why we need insurance for small business.
If you own a small business, it’s your name on the door and your reputation on the line with every product you send out. Sometimes owning a small business is a source of pride, and other times it’s downright scary. If you own a small business you need liability insurance to protect your investment and secure your reputation in your field.
Small business liability insurance protects you in the event of a lawsuit. Consumers have received a great deal of money from lawsuits involving faulty products. If you’re involved in a lawsuit it may be more than just your business on the line. If you are the owner of a sole proprietorship or a partnership, your home and other property may be at risk too.
Liability insurance is a very important thing to understand. Thank you for posting this article and helping me better understand. Awesome job!
Thank you for the safety information. This will be useful for my small business when setting up insurance.
This is an all together great article. I was looking into starting a business and this is just the information i was looking to find!
I wasn’t sure if I should get insurance or where to find where to get it.
Thanks a lot for posting this, It was very helpful and informative!
Thanks for the great info! I am looking to start-up a new business soon and am glad you’ve posted this…made me rethink skipping the insurance to save money…
I did not know that even freelancers need liability insurance. Everyone who does such work should read this article; I’m glad I did.
Excellent article! I think liability insurance is necessary for small businesses, for auto insurance and home insurance. Liability insurance basically sets you free when things happen, and things do happen! I learned something from this article and everyone who thinks about obtaining insurance should read this article!
Very informative article. I recently did some research in this area but you touched on areas I did not find. Thanks!
These days, anyone could get sued for anything. I’m glad there is something like liability insurance so that you can be protected from having to pay a large price
This has to be one of the most informative blog post i have readied in a while that isn’t just a rehash of something else. I thank you for that and the great article you wrote.
Fine article and informative. I thank you for that and the great article you wrote. Liability coverage come in many packages and forms, it is always a good policy for business owner to evaluate his business needs and purchase the necessary coverage protection for himself and business alike.
This was a great article. It has shown me that my small business may need it.
this was a really relevant article, especially in these times. In my personal opinion, all these reasons should apply to most businesses. People will always find ways to get hurt at work, and they’re going to consider whether or not your business has liability insurance when applying.
It all comes down to, if you want to keep yourself out of hot water, get your business liability insurance.
wow, I am excited to know something called Business liability insurance. This is what I am looking for. I need this. Thanks a lot.
Liability insurance is very important. If you don’t have it, you could be in serious trouble.
I am a independant software consultant. I would not consider running my business with out professional liability insurance. People today are quick to lawyer up if something goes wrong.
If you are working for yourself you need this type of insurance.
Insurance is what takes you to the same level as your competition. Ask your self how you could compete with people who are able to advertise freely and feel confident that they have everything covered to protect their customers. Insure your small business and let people know your insured. Your company gain respect this way. Great point Nhatvi.