No matter what sort of business you’re running, you need the right insurance to safeguard you from nasty lawsuits. Business liability insurance helps protect your financial interests in case you ever have to face a lawsuit. Not only does this insurance policy helps protect you against financial liabilities incurred, but it also keeps you from paying legal defense fees. If you’re interested in learning how you can protect your business, keep reading below.
What types of liability insurance do you need?
Two main types of business liability insurance helps protect the financial interests of companies or business owners. While there are other categories of liability insurance, the two we shall discuss are the most important ones and are essential for all business owners, big or small.
General Liability Insurance
This is a basic form of liability insurance that is absolutely essential even for small home-based businesses. This package helps you cover legal fees and damages if you, your products or your employees cause injury to any third party. The damage can be either bodily damage or property damage. So, if a client trips in your premises and breaks their computer, general liability insurance will help cover the damages for that. Additionally, if your services cause damage to any third party, the damages will be covered by general liability insurance.
Professional Liability Insurance
Professional liability insurance is incredibly useful in the case of your business improperly rendering any services, or making any professional mistakes. These mistakes can be incredibly costly, and the third party can sue your company. If you have missed any deadlines, or have any contract disputes, you can be sued. Professional liability insurance is also known as errors and omissions insurance. Every type of business, from legal firms to hair salons to technology providers need to have this insurance policy in case any service or product causes any damage to a client.
How much business liability insurance do I need?
Just as it’s essential to consider which sort of business liability insurance you need, it’s also crucial to assess just how much coverage you require. You need to make sure that you don’t overspend or underspend. Before picking a package, consider the legal minimums as well as the structure of your business. States often have minimum insurance levels set for different types of companies, with some companies being required to pay higher amounts based on location and type of business. Furthermore, if your business structure is such where you obey all the safety rules, you can get a lower limit.
Your contract with a client will often require you to have liability insurance, and this contract helps simplify things as it specifies how much insurance you need. Additionally, before you sign a contract with a client, they usually ask if you have professional liability insurance, with an average minimum of $1 million.
While there are many types of business insurance, the ones that every business need, in any case, are the general liability and professional liability insurance. The amount of insurance your business should carry depends on the nature of your business, location, and the clients you work with.