What Types Of Liability Insurance Policies Might Your Business Need?

Commercial liability insurance protects you against risk. Every business faces some level of risk. Even if your risk is small, you might not need to purchase insurance. You need to be aware of what your liability insurance covers before you can make that final decision.

You should first consider this type of insurance. General liability insurance. GLI protects you against injuries and property damage. Numerous cases have been filed against businesses that resulted in millions of dollars in damages. These lawsuits are not directed at big businesses. Many small businesses have been sued and forced to pay $1 million in damages.

GLI is necessary for store owners who have a physical location that customers visit. You will likely need a policy that covers general liability if you’re a contractor, or any other independent contractor who works with costly material or around others.

However, this policy might not suffice…

A commercial insurance policy may be required if you offer professional services to your clients. Professional Liability Insurance. This is sometimes called Indemnity insurance or Errors and Omissions Insurance.

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Although professional liability insurance is not the same as GLI, most businesses purchase these policies from the same insurer. Professional liability insurance covers you in the event of a failure to provide services as promised or for damages caused by mistakes.

Here is an example of why you should consider both types of insurance.

Let’s suppose you own a small computer shop. Customers visit you to solve their computer problems or to purchase your custom-made computers and accessories. One day, a customer walks into your shop and bumps into a printer cable left behind by one of your employees. Their back hurt and they have to be out of work for several months. This has resulted in thousands of dollars in lost wages. Their lawyers determined it was your fault and they are unable to pay $50,000 of their medical bills.

Guess who’s responsible for this unfortunate situation? Your company. Your insurance company would cover the judgment or settlement costs if you have general insurance. This policy would also cover all legal costs associated with the case. You could be personally responsible for any damages and legal fees if you do not have this policy.

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Now, let’s pretend you had GLI and were covered for everything related to that claim. This is great news! Bucky, not so fast…

Did you know that an employee was partially responsible for the accident. He was so flustered that morning that the wrong hard drive was formatted and all data on the laptop of your most important client was lost. Many years of important data, including family photos and videos, business spreadsheets and passwords as well as credit card information, have been lost. All of it was erased in a flash.

Is general liability insurance available to cover this?

It does not, unfortunately.

Professional liability insurance is required for businesses that need it. It covers both contractors and businesses for errors. This was a large one. Client seeks $100,000 in damages for lost time and business resulting from the computer’s data being deleted. Small businesses are unable to absorb such a large loss and many have had to shut down their business due to it. Do not let this happen to you business.

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Now that you know what types of Commercial Liability Insurance policies are available to you and what each covers, you can prepare for situations like this. Talk to an insurance broker or agent who specializes in business insurance and discuss your needs. You can rest assured that you will be covered for all eventualities if you invest in the right policies.