5 Types of Liability Insurance for Small Businesses

1. General Liability Coverage

General liability coverage protects your business if a customer or third party sues you for property damage, personal injury, or advertising injuries. This type of insurance can be written as a stand-alone policy or included in a commercial business owner’s policy (BOP).

Some policies will also include liability protection for your employees. This includes legal defense costs and settlements or judgments if a current or former employee sues you for employment-related issues such as wrongful termination, discrimination, or harassment.

2. Employers’ Liability Coverage

Employers’ liability coverage is a form of liability insurance that protects a business owner against workplace lawsuits. It usually covers the cost of legal fees, including judgments and settlements.

This type of policy is usually sold as part of a workers’ compensation or general liability policy, but it can be purchased on its own as well. In some states, this is required by law.

3. Commercial Auto Coverage

Commercial auto insurance is designed to protect small businesses from litigation associated with automotive incidents. This includes accidents, thefts, vandalism, and other types of damage.

Unlike personal auto insurance, commercial car insurance provides higher policy limits and covers your company against liability for all of the vehicles in your fleet. You may also choose to add optional coverages for additional protection.

4. Commercial Umbrella Coverage

When an accident or lawsuit hits your business, the damage can easily exceed your primary liability insurance limits. In such situations, an umbrella policy can help alleviate the financial burden.

Many businesses purchase commercial umbrella policies because they need more liability coverage than their primary policies can provide. It is important to understand how this type of policy works, especially when deciding whether or not it is right for your business.

5. Professional Liability Coverage

Professional Liability Coverage helps protect professionals from lawsuits based on errors and omissions. It typically covers the cost of legal defense and payment of judgments against you for alleged mistakes, such as failure to deliver your services or provide advice that has led to financial loss for a client.

It is an important coverage option for any business that offers professional services or advice. It is often paired with general liability insurance for more complete coverage.

6. Cyber Liability Coverage

Cyber liability coverage helps pay for damages a business faces when a data breach occurs. It typically covers attorney and court fees, costs related to data breaches, and settlements a business is obligated to pay.

It also protects a company from business interruption losses, which include lost revenue when its network is down. It can cover ransomware attacks and other technological perils that can disrupt operations.

7. Professional Indemnity Coverage

Professional indemnity insurance is a type of liability coverage designed to cover errors and omissions, negligence, or breach of duty. It can protect your business from costly lawsuits by clients who think they’ve been harmed by your work.

This policy can protect a wide range of occupations, from accountants and lawyers to IT consultants, recruitment experts, and graphic designers. It’s an essential part of any professional service business.

8. Medical Payments Coverage

Medical Payments Coverage, also known as MedPay, can be a valuable add-on for your auto insurance policy. This coverage applies regardless of who is at fault in an accident and pays for medical expenses associated with your car crash.

MedPay typically covers you and your passengers, as well as any family members that are listed on your policy. It can also cover injuries you suffer while outside your vehicle as a pedestrian or bicyclist.

9.The Conclusion of the Liability Insurance Policy

A liability insurance policy is a type of insurance that protects against third-party claims for damage or injury. Liability insurance is typically written on an occurrence basis, meaning that the insurer agrees to defend and indemnify any claim arising out of or in the course of any act or omission by an insured that results in a covered loss under the policy.

Coverage

One of the best things about auto insurance is that your policy is designed to protect you and your family if the worst happens. For example, if you are involved in an accident that damages someone else’s property, your insurance company will help pay to fix or replace that damage. Liability coverage is also an important component of any car insurance policy. It’s no secret that the insurance industry is a crowded and highly competitive marketplace. The key is to do your due diligence and find a company with an insurance agent you can trust. This is especially true if you are looking to switch insurers. Using an independent insurance agency can save you money and time in the long run. Besides, it is easier to make a good decision when you are not under pressure from your agent to buy something you may not need.

Exclusions

Typically, liability insurance is the first coverage a business puts in place. However, it is not designed to cover all possible risks.

Insurers limit the protection that liability insurance provides by including exclusions and limitations in the policy. These limits and exclusions can be a challenge to understand, but they can help protect a company from the possibility of uninsured losses.

For example, many general liability policies exclude claims from a business’s vehicles. This means that a commercial auto policy won’t cover claims if the business was involved in an accident that caused property damage or bodily injury.

Limits

Whether it’s liability insurance for your car, home, or something else, each policy has limits. These limits indicate the maximum amount your insurer will pay out on a covered claim, so it’s important to understand what they mean.

Let’s say you’re driving down the road, and you swerve in front of someone and cause an accident. Both you and the other driver are injured, but their medical bills come to just under $25,000 per person and $50,000 collectively.

That’s below your bodily injury limit and property damage limit, which is represented by the final number ($15,000). Your insurance company will only cover those amounts once they’ve reached those limits.