Liability Insurance: Stay Protected and Ready in Modern TimesJulius Conley 01 / February / 22 Visitors: 311
Liability insurance is a form of protection against losses (for example, lawsuits). In any business, there is always the possibility of being sued by customers, or potential customers, who are not satisfied with a product or service. Even worse, your company may be sued for damage caused by a product or service. As a small business owner, you need liability insurance to protect your business from such opportunities.
What liability insurance does
Liability insurance protects your business in the event that a customer, or even a passing person, is injured on the property of your business. For example, if someone trips over loose carpet or slips on a wet floor, liability insurance will help cover costs, such as medical expenses related to an injury. If a person files a lawsuit, liability insurance will also help cover your costs of legal defense and settlement.
If you rent a property, liability insurance protects you from liability for damage caused by you as a tenant (for example, if you accidentally started a fire).
It is important to note that liability insurance does not indemnify you from guilt in a legal case. While your company may be wrong, the policy protects you from being forced to pay all damages from your assets.
When do you need liability insurance?
Although liability insurance is important, not all companies have the same policy. The coverage needed depends on the type of business you own and the perceived risk associated with it.
Here are some examples of industries that would benefit from a policy with high coverage limits:
Manufacturers, in case of damage caused by defective products.
Service providers, for damage to personal property.
Labor-intensive companies, to cover employees who become ill or injured due to business operations.
If you think your business is at low risk for incidents, the Small Business Association suggests looking at a business owner's (BOP) policy. A BOP is a cost-effective way to bundle liability and property insurance together.