Every business faces some level of risk, which is why most businesses need liability insurance. This coverage can help protect your business from claims such as malpractice or personal injury that could result in a lawsuit or legal liability.
The level of cover you need depends on the type of business you run, as every business has unique risks. A general liability insurance audit can help you review your business’s payroll and risk exposure to ensure you’re paying the right amount for insurance. For example, construction businesses may need coverage with higher liability limits than retail stores. There are also different types of liability insurance that you will need to consider when looking for a policy.
Types of Liability Insurance
The three main types of liability insurance are:
- General liability
- Professional responsibility
- Employer’s liability
- General liability
- General liability (GL) insurance is often called:
- Commercial General Liability (CGL) Insurance
- business liability insurance (BL)
It helps cover different types of general liability claims that your business has caused personal injury or property damage to others. It also covers reputational damage or mistakes in your ad. It is important to note that general liability insurance does not cover damage to your business property or your employee’s property. Commercial property insurance helps cover these claims.
Examples of General Liability Insurance
General Liability helps protect you if someone accuses you of:
- Bodily injury and property damage
- Damage to reputation
- Errors in advertising
Bodily injury includes any injury to a third party, such as a customer or client, that occurs at your business. For example, if a customer walks into your flower shop, slips on your wet floor and breaks their leg, your general liability insurance can help cover the cost of their medical bills.
General liability insurance does not cover your company’s employees. Instead, they are covered by your workers’ compensation insurance, which is a type of employer’s liability insurance.
Property damage includes any damage you or your employees cause to a third party’s property. For example, if your lawn mower company kicks up rocks that break a customer’s window, general liability will help cover the cost of repairing the damage.
Reputational damage means that another business accuses your business of having a negative impact on its reputation. Let’s say your workers are comparing your product to a competitor’s during an event. When your competitor finds out, they will file a lawsuit against your business. In cases like this, general liability can cover your legal defense costs.
Other examples of reputational damage include:
- Malicious prosecution
- Defamation
- Slander
- Bad eviction
- Invasion of privacy
Errors in advertising involve claims of liability for copyright infringement. If your marketing firm uses a copyrighted photo in an ad without permission, general liability insurance can help cover your legal defense.
You can get general liability insurance from private insurance companies like The Hartford. Our specialists are available at 855-829-1683 and can help you determine what types of insurance your business needs. You can learn more after getting a small business insurance quote.
Professional Responsibility
Professional liability (PL) insurance, also known as errors and omissions (E&O) insurance, helps cover claims that your business made mistakes in the services you provided. For example, if your client claims you gave them inaccurate financial advice and sues you because they lost money, E&O insurance can help cover your legal defense costs.
Professional liability can also help cover claims for:
Negligence
Coloring
Breach of good faith and fair dealing
Most businesses need professional indemnity insurance, especially if you provide professional services to customers.
Examples of coverage and professional liability
Some examples of what professional liability may cover include:
Attorney fees, which in some cases can cost anywhere from $100 to $200 per hour or more.1 Professional liability cases can take months or even years. That means it could cost you anywhere from $3,000 to $150,000, but professional indemnity insurance covers those legal bills if the lawsuit filed against you goes to trial.
Court costs, which may include courtroom booking expenses and payments to professional witnesses.
Administrative costs, including document collection costs such as:
- Medical records
- Business receipts
- Customer Waiver
- Written testimonies
Settlements and judgments that include money your business can pay the plaintiff. Many businesses cannot afford to pay settlements or judgments out of their own resources. Professional indemnity insurance may cover the payments for you.
To get professional liability coverage, get a small business insurance quote today.
Employer’s Liability
Professional liability does not apply to employees who have suffered occupational accidents or illnesses. For this type of coverage, your business needs workers’ compensation insurance.
Worker’ comp is a type of employer’s liability insurance that provides benefits to your employees if they become injured or sick on the job.
Depending on your state, business owners like you may be required by law to purchase employee coverage. Even if it’s not the law in your state, it’s still a good idea to get this coverage because it can help:
Pay medical expenses for employees who become injured or sick on the job.
Protect your business from a lawsuit due to a work-related injury or illness.
Examples of Workers’ Liability and Employer’s Liability Insurance
Worker’s comp can protect your employees if they suffer an injury or illness as a result of work. Some examples:
After moving to a new office, your manager trips over a misplaced box and breaks her wrist. Workers’ comp can help cover her medical expenses.
Coal miners develop black lung from long-term exposure to poor air quality. Workers’ comp can help cover the cost of his medical treatment and ongoing care.
Your receptionist has developed carpal tunnel syndrome from years of poor typing habits. Other examples of repetitive stress injuries include tendinitis and bursitis.
In addition to paying for medical care, the staffing company helps provide:
Disability benefits if a doctor says your employee is temporarily or permanently disabled. The amount and duration of disability payments depends on your state.
Missed wages when your employee needs to take time off to recover from a work-related injury.
Funeral expenses in the tragic event that your employee dies as a result of a work-related accident.
If your state requires workers’ compensation or you plan to purchase it to give your employees the protection they need, get a small business insurance quote today.
