The risks associated with running a business are complex. To protect your business against financial loss due to lawsuits and third-party claims, you should consider buying business liability insurance. There are many insurance policies on the market. But you must choose one that meets your needs and addresses all risks that your business may face.
The business liability insurance covers the owner and protects them against claims by third parties for injury to or property damage. This coverage covers legal costs as well as damages resulting from a lawsuit.
There are four types of business liability insurance. Choose the one that best suits your needs.
• General/commercial liability insurance: It is also known as Commercial General Liability (CGL) insurance. This coverage protects you and your business from lawsuits brought by third parties for bodily injuries or property damage. CGL will pay the legal fees and medical expenses.
• Professional liability insurance: This type of insurance protects professionals such as accountants, doctors, lawyers and engineers in the event of claims made by a third party or client for negligence, malpractice, errors or omission, while providing services to the clients. Some professionals are required to have professional liability insurance.
• Product liability insurance: Product liability insurance protects against liability from the use of faulty or damaged products. It covers manufacturers, wholesalers or distributors as well retailers and anyone else who sells the product to the public. It may apply to injuries or damages caused by a defective product.
• Commercial auto insurance: This insurance covers both liability and property risks a business owner faces, while using cars, trucks, autos or trailers. If the company vehicle is involved in an accident that causes bodily injury or property damage, the policy will cover the third party’s claims. This policy can also protect your employees who use their personal vehicles to conduct business.
Types of claims
The business liability policy covers four types of claims by third parties. These are:
• Bodily injury – The liability covers the claims, if a person is accidentally injured by your company or its employees.
• Property damage – This type of liability coverage pays for damages caused by you or your employee to others’ property such as vehicles, house or furniture.
• Personal injury – Personal injury is different from bodily injury. Personal injury liability covers policy holders from third-party claims, such as slander and libel. This coverage also covers damage to a person or company’s character, invasion or false arrest.
• False or misleading advertising injury – An advertisement injury is a harm caused to a third party as a result of the policy holder’s advertising efforts. Slander, libel copyright infringement, invasion of privacy, and libel are all covered.
Covered costs
The policyholder’s business liability insurance covers the following major damages to third parties. The policy holder is responsible for compensatory, general and punitive damages. Compensation for financial loss of third parties due to injury is covered in the event of a compensatory damage claim. Non-monetary losses, such as mental torture, pain or suffering, are covered in general damage claims. The policy holder must pay punitive damages, or any additional penalties or charges imposed by the third party.
Benefits
The business liability insurance covers the financial loss that could be caused by claims against the company. The policy holder is responsible for paying the legal costs and the insurance company will not only pay the damages, but it also covers the legal costs. The insurance company will pay the policy holder the maximum amount of coverage in the event of settlements by third-party claims.
