What is Business Liability Insurance?
Business liability insurance offers financial protection for business owners and companies to deal with third-party claims or lawsuits. Good insurance policies will also cover any liabilities or expenses associated with the legal process.
What Does Business Liability Insurance Cover?
You may wonder what does business liability insurance cover? Business liability insurance protects the company and its financial interest from penalties suffered from litigation, legal costs, or third-party claims. Business liability insurance coverage also extends to the medical costs of a visitor or customer who gets injured on company property. It is important to remember that liability insurance is a third-party coverage, which means someone who is not your company or employees.
Many businesses have a physical location, and with that comes extra risk that someone could hurt themselves at your place of business.Other items that business liability insurance covers include:
- Property Damage done by your product or employee
- Physical Injury to others
- Defense Costs
- Medical Costs
- Advertising injury
- Reputational harm
Items Not Covered by Liability Insurance
Fraudulent and intentional actions do not fall under a typical liability policy. Also, if a customer has property that is housed at your business, it may not be covered by liability insurance. Under a standard liability policy, if you offer your clients professional advice that turns out to be wrong and it causes them financial harm, that will not be covered. A professional liability endorsement or policy would need to be added in addition to your standard general liability policy. There are many different types of specialty liability policies available to cover various business pursuits. It is always best to talk with your knowledgeable, independent agent to make sure you have the right protections for what your business does.
Who Needs Business Liability Insurance?
Things might be going perfectly for you: sales are at an all-time high, your employees are happy and productive, and your customers love you. However, one small accident could throw everything off with legal fees and costs. It would be best for any business to invest in a level of liability insurance that aligns with its degree of exposure. Also, oftentimes, the standard contracts you enter into as a business owner, for example a lease, will have a liability insurance requirement that may need to be satisfied.
General Liability Insurance vs. Business Owner’s Policy
General liability insurance will deliver a blanket policy that protects against standard events that the company faces, such as property damage, bodily injuries, personal injuries, and advertising injuries.
However, a business owner’s policy is the same thing, except with additional property protection. It will bundle multiple insurance coverages into a single package at a better rate for the business. Business owner’s policies are also only available to business owners that qualify under certain criteria.
How Much Insurance Do I Need?
Business liability insurance is designed to protect your company from potential risks, adhere to contract requirements, and give you peace of mind. So, how much do you need?
Every business is different, which is why your business should assess its risks. Below are some key factors to consider when deciding what type of insurance to purchase:
- The kind of work you do – will your business consult clients, operate heavy machinery, or be in charge of sensitive data?
- The number of employees – the more employees you have, the more chance of someone causes damages or could hurt someone
- Your location – some states may have different requirements for insurance.
- Your total assets – when involved in a lawsuit, oftentimes attorney’s will look at a company’s overall net worth, and that will affect the amount in damages they try to sue for. The greater your assets, the more insurance you may want to purchase.
How to Find a Liability Insurance Policy that’s Best for You
Now that you know the concepts and applications of business liability insurance, it is time for you to act. The process is simple:
- Find a trusted insurance broker who will take the time to understand your needs and offer the best policy.
- Analyze your risks by understanding what kind of work you do, how many employees you have, and where you operate.
- Compare deductible pricing to determine a policy that best fits your budget and business needs.
Are you still wondering about the principles of liability insurance for businesses? Below are some of the most common questions business owners ask.
Is Liability Insurance Required for Businesses?
General business liability insurance is not usually required. However, some landlords, developers, and contractors in certain states will require it to engage in business.
How Much Does Liability Insurance Cost?
The cost of liability insurance will depend on your policy limits, business operations, sales, number of employees, and other factors. Most small businesses will pay an average of $40 per month on general liability insurance.
Is Liability Insurance Tax Deductible?
Based on the IRS guide for business expenses, tax-deductible items include any necessary or ordinary costs of insurance. These types of insurance qualify as business expenses:
- General liability insurance
- Professional liability insurance
- Commercial property insurance
- Business interruption insurance
- Cyber liability insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Unemployment insurance
- Life insurance and health insurance
How Doyle & Ogden Can Help
The team at Doyle & Ogden is committed to finding an insurance policy that best fits your needs. Our attention to detail, passion for your success, and long standing expertise are what separates us from the rest. We offer all lines of insurance to cater toward your budget and insurance needs, including:
- Liability insurance
- Property insurance
- Commercial auto insurance
- Workers’ compensation
- Group and worksite employee & employer benefits
- Technology errors & omissions
- Directors & officers
- Employers liability
- Inland & ocean marine
- Cyber liability