What is Business Liability Insurance?

Did you know that many business owners are required to personally guarantee any loans or agreements they enter into? This can financially devastating to a family if the business cannot pay its bills on time. In a market where creditors have no sympathy for economic conditions, it is imperative for all businesses to retain at least some form of liability insurance.

• What is Business Liability Insurance? - Business Liability Insurance protects you, the business owner, if you are sued for personal injury or for property damages, whether you are found personally liable or not. Business Liability Insurance will protect your personal assets from being included in any potential lawsuits.
• What is Personal Liability? - You may be found personally liable if you have done one of the following:
  • You have signed a personal guarantee for loans or other services
  • You have injured someone
  • You have acted in an irresponsible or unlawful way that led to damages or injuries
  • You are in a partnership and not acting as a separate entity
• What Are the Types of Business Liability Insurance? - There are three basic types of business liability insurance to choose from, although other options and amendments, such as Umbrella policies, may be available to you.
• General Liability Insurance - General Liability Insurance is the most common type of liability insurance and the policy that most business owners purchase. Depending on the occupational code for your business, General Liability Insurance may be the only standard liability insurance you will need to invest in. However, if your occupational code lists you as having more risk factors than most businesses, you may be required to purchase one or both of the remaining liability coverages. General Liability Insurance protects you from advertising, injury and property damage claims in the event that you are sued or found personally liable.
• Professional Liability Insurance - Depending on the type of work you do, you may be legally required to purchase and maintain Professional Liability Insurance. This type of insurance protects you from having any professional liability in the case of omissions (such as in advertising or package contents), errors, negligent practices and malpractice. Many doctors and advertising professionals carry Professional Liability Insurance.
• Product Liability Insurance - If you manufacture goods for distribution or distribute goods to the general public and consumers, you will need to purchase Product Liability Insurance. This insurance will protect you from any liability you may have in the injury of someone using your products. You may need more insurance if you sell high-risk products, such as gas-lit stoves.

Note: Some states may require you to purchase one or more of the above policies to protect yourselves and your customers in the event that you are found liable for any injuries or property damages.

Remember, while it is easy to maintain that accidents never happen and bills are always paid on time in your workplace, even one small misstep could cost you millions of dollars in business and personally, if you do not have Liability Insurance.