Everyone knows that we do not live in a world where everything goes as planned every day. And, no matter how much a business tries to please everyone, there will always be a customer who believes he was not treated appropriately or sold a product that did not live up to its claims. These are some of the reasons why it is not a good idea to operate without business liability insurance. Business liability insurance can be purchased in two main categories: general liability and professional liability. There are also other categories besides these such as product liability and insurance to protect intellectual property. Whatever the type of coverage, it is not wise to operate your business without business liability insurance because it is a world full of risk.
You are protecting yourself against losing assets in a lawsuit.
It is a mistake to think that if you are a business owner you cannot be held personally liable in a lawsuit. For example, a sole proprietor is personally liable because this person and the business are the same entity. The same goes for a partnership. Even with limited liability business structures a business owner can be held liable if an incident arises out of conducting businesses illegally or not operating separate from personal activities.
General liability insurance protects against lawsuits due to mishaps.
These mishaps include incidents like injury on the property or property damage. Probably the most well-known example of the need for general liability coverage is when a customer sues a grocery store after slipping on a spill in one of its aisles and sustaining a serious injury. If you have customers coming to your place of business, even if it is your home, then you definitely need general liability insurance.
Professional liability insurance protects against mistakes and oversight.
If you are service provider (e.g., doctor, software consultant, architect, accountant) then you may need professional liability insurance to protect your assets from a lawsuit in case you make a mistake in the performance of your trade. It is called “errors and omissions” insurance. Some contracts require the contractor to carry it and it is mandatory in some states. The amount of liability insurance needed depends on the risk involved in the profession. For example, practicing as a doctor carries the risk of making a mistake that could place a person’s life in jeopardy. Considering this, a doctor would pay more and have to carry more coverage than a software consultant.
There are other variations of business liability insurance.
These are for special needs such as product liability to give protection in the event a product causes damage or injury. There is intellectual property insurance that protects from such claims as copyright infringement. There is even business interruption coverage that is intended to cover a break in revenue due to some external event that halts your business operations.
Business liability insurance is expensive and sometimes difficult to get.
It is especially difficult for startup businesses to purchase because the carriers look for stability over time in commercial operations. It is sometimes beneficial to deal with an insurance broker over a direct insurance agent because a broker can get you quotes from several different carriers which allows for comparison.