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What Business Liability Insurance Is and Why Your Business Needs It

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Imagine what would happen if someone would trip over a display and break a leg while in your grocery store. Or if the heating system your workers installed quit working on the coldest day of the year. Now imagine if you didn’t have coverage for any of those things. Sounds scary, right?

Well, you can protect yourself during accidents as well as from possible lawsuits and the damages you might incur if your business has business liability insurance.

Why You Need It

  • Business liability insurance, also known as general business liability insurance or commercial general business liability, will pay for medical costs, such as emergency room stays or ambulances, or other expenses if someone gets injured on your business property.
  • It will pay your legal costs to defend you if someone sues your business and will pay for any settlement or award if you lose a lawsuit. Such covered damages might include punitive damages or an award against you to punish you for something you did wrong.
  • It could also cover you on non-monetary damages another party has suffered or compensatory damages, which could include almost anything – medical bills, lost wages, damages caused by increased blood pressure or anxiety-related attacks.
  • It could pay damages you may have suffered because of a fire or other major event.
  • America is full of people who like to sue influential individuals and businesses. While your costs for the insurance are minimal, if you would lose a lawsuit, your business could owe anywhere from thousands to millions of dollars.

How much coverage do you need?

How do you know how much coverage you need for your business? A professional insurance agent can help you determine everything in detail, however, the type of business you own might also provide some guidance in answering this question.

For example, if you own a web design company, you would not need as much insurance as if you were a building contractor. This is because the risk of a building contractor being responsible for someone being injured is greater, and when this happens, damages are typically more. As an example, medical costs for an injury might be $200,000 to $300,000, and legal fees could total more than $100,000. If your coverage is for only $300,000, you might owe from $50,000 to $100,000 out-of-pocket.

This is why someone with a higher risk of owing expensive damages who has business liability insurance might want to also add umbrella coverage or excess insurance, while a web designer might not need as much insurance.

What else is covered with business liability insurance?

Business liability insurance also protects you against other types of claims against your company:

  • Copyright infringement. Someone can owe from $200 to $150,000 for each work infringed.
  • Advertising injures. This could include damages caused by slander, libel, and invasion of privacy.
  • Reputation damages. In this type of claim, someone might sue you, claiming defamation and damage to his character. You could be responsible for compensatory damages, punitive damages, and assumed damages.
  • Data breach and cyber liability. If someone hacked your computer system, finding and catching who did it would be your smallest concern in the matter. You would be responsible for the compromising of any business or customer data.
  • Employee practices liability. Your policy protects you if you face a lawsuit of wrongful termination, discrimination, harassment, or any other employment-related charge.

Business liability insurance can protect you against a number of charges against you, if sued, as well as damages you may suffer in a major disaster, such as a fire. If you don’t yet have this coverage, just think how much you could owe if someone sues you. Check out our article detailing other policies you need if you own a restaurant.

If you don’t have business liability insurance yet, call our insurance agents today and get some peace of mind.

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