There are different types of insurance coverage for businesses. Typically, the level and nature of risk depend on the type of business. However, liability insurance is a necessary policy cover for any entrepreneur. Liability insurance protects a business from claims such as injuries and negligence. This post focuses on the main types of liability insurance for a business.
The general liability insurance coverage is also known as commercial general liability or business liability. Broadly, general liability protects the business against claims of bodily injury, property damage, and reputational harm. Bodily injury consists of injuries by third parties within the business premises. For instance, a client may suffer a fall accident. In such a case, general liability insurance would cater to medication. Then, general liability also compensates third parties for property damage resulting from a business employee's action. More so, a business may face legal suits for reputational harm such as libel, slander, advertising errors, and violation of privacy. In such cases, general liability insurance caters to the legal defense costs.
Professional liability covers claims against errors and omissions. The leading cause of professional liability lawsuits is negligence. For instance, a medical professional may make a misdiagnosis, causing physical and mental harm. Or, a financial consultant may provide inaccurate advice leading to loss of money. Professional liability may include malpractices such as misrepresentation and violation of good faith. In such cases, the clients may sue the business and the professionals for negligence and malpractice. Consequently, professional liability insurance would cover attorney fees, court costs, and settlements.
General liability does not cover the injuries and illnesses suffered by the company employees at the workplace. Thus, the business has to apply for employer liability insurance, also known as workers' compensation insurance. Usually, state laws dictate that businesses maintain adequate workers' comp coverage. Typically, the workers' comp insurance caters to the cost of medical care for employees who get sick or hurt due to their work. For instance, a receptionist may suffer repetitive stress injuries, while a construction worker can have a fall injury. In such a situation, employer liability insurance will also pay for disability benefits, missed wages, and funeral costs if necessary. Thus, the insurance policy protects the business from work-related injuries and illness lawsuits.
Depending on your type of business, it is essential to get adequate liability insurance. Engage an insurance broker or agent, assess your liability risks, and protect yourself from lawsuits and claims.