A lot of good things come with running a small business, but it has its fair share of risks too. One risk that you need to be fully aware of is the possibility of having a claim or worse, a lawsuit, filed against your business by a client, employee, or another business.
Considering how costly paying off claims and fighting legal battles can get, you need to protect your business with liability insurance.
There are several types of liability insurance and you may need one or more of them. Here’s an overview of each to know the differences among them:
General Liability Insurance
Let’s say you have a convenience store and, within the premises, a customer slipped, fell, and broke an arm. The customer then filed a claim against your business for bodily injury. That’s going to be a costly proposition for you because your business can be held liable for the whole thing. Now, if you have general liability insurance, you can easily pay for the medical expenses and other charges filed by the claimant.
General liability insurance also covers damages to the property of a third party which were incurred within the premises of your business. Here’s a scenario to illustrate: if a roofing contractor you hired accidentally dropped a tool straight into the windshield of your client’s parked car, you can use general liability insurance to pay for the damages and avoid further conflict with the car owner.
Often, general liability insurance is also referred to as business liability insurance because it comes in handy when another business, most likely a competitor, accuses yours of reputational harm. A simple example of this is if your employee bashes a competitor in public, the competitor can file a claim against your business since you are responsible for your employee. If that happens, this liability insurance can help you cover the expenses for the claim.
Workers’ Compensation Insurance
Workers’ compensation insurance is a type of liability insurance that protects your employees should they suffer injuries or illnesses due to occupational hazards. This insurance can pay for the cost of medical care and missed wages of employees who have sustained injuries or become ill while on the job.
In case the employee becomes temporarily or permanently disabled due to a work-related incident, he or she will be eligible for disability benefits and the cost will be drawn from your workers’ compensation insurance. In the unfortunate event that the employee passes away, workers’ compensation insurance will also be able to shoulder the funeral expenses, death benefits, and other expenses.
It should be noted that employers in most states are required to get workers’ compensation insurance to ensure the protection of their employees.
Professional Liability Insurance
Professional liability insurance, also referred to as errors and omissions insurance, protects people who provide professional advice and services from claims filed against them for committed errors or negligent services that led to financial loss.
Having professional liability insurance is a must for accountants, doctors, architects, engineers, attorneys, dentists, real estate brokers, and other professionals. It is protection that they need to have in case they find themselves at the receiving end of a malpractice or negligence suit. Legal defense costs will be considerably high, but with this type of liability insurance, professionals should be able to pay for them without having to break the bank.
With all the risks that your small business may face, it would be wise to prepare for any eventuality. Getting the right type of liability insurance for your small business should help you do just that and more.
If you’re thinking of getting one for your business, we at CIII Insurance Services provide a broad range of Commercial, Cybersecurity, Employee Benefits, and General Liability products. We even partner with some of the finest carriers to deliver these products to you. Get in touch with us and we’ll help you secure your liability insurance today.