Business Liability Insurance

Understanding Business Liability Insurance and the Protection it Provides

So you can keep your doors open for years to come.

Business Liability Insurance

No matter what kind of business you run, it needs protection from all kinds of threats, including lawsuits. Though harm to the public by your business could be purely accidental, your business can still get sued for it — and lose a lot of money without the right coverage. That’s why having general liability insurance is so important.

Fortunately an independent insurance agent can help you find the right type of business liability insurance to protect your business against many kinds of lawsuits and legal troubles. But first, let's take a deep dive into business liability insurance and find out what it's all about.

What Is Liability Coverage?

Liability insurance is a type of coverage that protects the insured against lawsuits and legal claims of bodily injury or property damage caused by the business or other entity. The right liability insurance reimburses the policyholder for legal costs, including attorney, court, and settlement fees, regardless of whether they're actually at fault. Coverage also protects against advertising and emotional injuries and more.

Who Sells Business Liability Insurance?

Business liability insurance is available from many different insurance companies, and the best way to find the right carrier for you is through working with an independent insurance agent. Independent insurance agents know which insurance companies to recommend to meet your needs, and can provide informed suggestions based on company reliability, rates, and more.

While many insurance companies could provide business liability insurance for you, finding coverage could also depend on the area you live in. Here are a few of our top picks for business liability insurance.

Top Business Liability Insurance Companies Star Ratings
The Hartford
5 star rating
Hiscox
Nationwide
5 star rating
Progressive
5 star rating
Farmers
4.5/5 star rating

One business liability insurance company outshines its competitors.

  • Best overall business liability insurance company  Nationwide

Nationwide is a leading small business insurer with an "A+" rating from AM Best. The carrier is on the Fortune 100 list and currently provides more than half a million customers across the US with quality coverage. Aside from their outstanding insurance catalogue, Nationwide offers superior customer service and 24/7 claims reporting. 

Nationwide provides the following types of liability coverage for businesses:

  • Hired and non-hired auto liability
  • Umbrella insurance
  • Product and completed operations liability
  • Employment-related practices liability
  • Directors and officers liability
  • Liquor liability
  • Fire legal liability
  • Personal and advertising liability

With their comprehensive business liability packages and generous discounts, Nationwide is our top pick for business liability insurance. An independent insurance agent can further help you decide if Nationwide is the right insurance company for your business liability coverage.

What Does General Liability Insurance Cover?

General liability insurance provides important legal protection for businesses of all kinds, across the country. Policies offer reimbursement for the following:

  • Claims relating to bodily injury: If a third party, such as a customer, slips and falls on your business premises or otherwise injures themselves and blames you, general liability insurance will reimburse for legal costs.
  • Claims relating to property damage: If a third party, such as a customer, claims to have had their personal property damaged as a result of your business, general liability will reimburse for legal costs.
  • Claims relating to advertising injury: If your business’s advertisements cause some sort of harm to a third party, such as emotional harm, general liability insurance will cover the legal costs.
  • Medical payments: General liability insurance will also cover medical costs stemming from injured third parties on your business premises, or who claim to have been injured by your business’s operations. Coverage kicks in regardless of actual fault.

Personal liability situations:

Personal Liability Situations

An independent insurance agent can help you find the general liability insurance that best works for your unique business’s needs.

General Liability Coverage Examples

General liability is a crucial part of any business insurance package. Here are just a few important examples of coverage in action.

Coverages provided under general liability insurance

  • Third party bodily harm or property damage caused by your business
  • Advertising injuries and copyright infringement caused by your business
  • Customer or other third party medical treatments due to injury by your business
  • Rented property damage caused by many threats, such as fire and lightning
  • Reputational harm caused by your business, such as libel or slander
  • Privacy violations by your business

Business liability insurance has many crucial uses for companies of all kinds.

How Much Does Business Liability Insurance Cost?

Liability insurance for businesses can range in price depending on numerous factors. Check out the chart below for average premiums for general liability insurance paid by consumers in recent years for a better estimate.

Average cost for B2C general liability insurance premiums in the United States (in U.S. dollars)

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In recent years, the average premium for general liability insurance was $340 annually. In the future, premiums are expected to rise to an average of $380 annually. Keep in mind that general liability insurance is just one type of coverage needed by businesses.

To figure the cost of your specific business liability policy, you’ll have to consider the following factors of your business:

  • Annual profits
  • Size of business
  • Exact location
  • Specific operations
  • Risk level
  • Additional coverages

Some professions pay a lot more for their general liability coverage than others. For example, construction workers tend to pay much more for their liability insurance than food truck operators. Your independent insurance agent can help you find quotes and exact figures for business liability coverage in your area.

How Liability Insurance Works

Liability insurance is also called third-party insurance, and protects businesses against claims of property damage or bodily injury by third parties. 

Intentionally malicious or criminal acts aren't covered by liability insurance.

Liability coverage protects businesses from hefty legal fees in the event of a lawsuit against them.

Why Do You Need Business Liability Insurance? 

As a business owner, you can be sued at any time for any reason. Even a customer slipping could cost you thousands of dollars in medical expenses if they get injured. And there’s always the possibility that you’ll be sued for additional damages. 

Medical bills and other related expenses are a lot to cover for a small business. And they’re just the tip of the iceberg if you are sued in such a situation. Attorney fees, court costs, and court-ordered settlements or judgments can easily bankrupt your business, if you lack the right coverage.

What Does Commercial General Liability Insurance Cover? 

Commercial general liability policies cover three main types of liability exposures and resulting lawsuits:

  • Premises and operations exposures: Claims against your business will be covered for bodily injury and property damage related to the ownership and maintenance of the business premises, or as the result of business operations conducted both at and away from the business premises.
  • Products and completed operations exposures: Claims will be covered for bodily injury and property damage that result from faulty products or completed operations (work performed by your business).
  • Indirect/contingent exposures: Claims resulting from the negligent actions of independent contractors and subcontractors that you hire will be covered.

There are three types of claims for which you will receive payment from the insurance company:

  • Accidental bodily injury or property damage that your business is legally responsible for
  • Personal injury or advertising injury that the business is found legally responsible for
  • Medical expenses for individuals injured on the premises of the business or by the business operations, regardless of fault

An independent insurance agent can further explain how and when general liability insurance covers your business.

What Isn't Covered by General Liability Insurance? 

While general liability coverage is quite comprehensive, not every type of liability exposure is covered. After examining the exclusions, you might find gaps for which you have to purchase additional coverage. 

Here are some of the most common general liability exclusions:

  • Liability claims covered under other types of insurance policies, including workers’ compensation, professional liability, commercial auto liability, and directors’ and officers’ liability coverage
  • Pollution liability claims
  • Claims resulting from damage to the property of others that is in the care, custody, and control of the business (e.g., vehicles at an auto repair shop) 
  • Product recall liability claims
  • Any legal actions that do not involve a claim for bodily injury, property damage, personal injury, or advertising injury 
  • Most contract disputes
  • Actions by a governmental agency related to failing to follow regulations
  • Claims for back taxes 
  • Failure to provide a safe workplace
  • Professional negligence, or errors and omissions claims

Business owners can purchase other types of liability policies to fill any gaps that they have, or you can often add endorsements to your general liability policy for certain types of liability coverage. 

Is General Liability Insurance Required by Law?

General liability insurance may not be legally required by your state, but it's imperative to be covered from a responsibility standpoint. Without the right liability protection, your business could go bankrupt after just one hefty lawsuit, which could be impossible to predict.

Other Types of Business Liability Insurance 

Commercial general liability policies offer broad protection, but do not protect you from just any type of lawsuit. Depending on the type of work you do, you might need additional liability policies or endorsements.

An independent insurance agent can help you assess your need for additional liability coverage, such as:

  • Cyber liability insurance: Pays for costs related to a cyber breach and legal costs if a customer or supplier who was harmed by the breach sues you. 
  • Employers liability insurance: Protects employers from financial loss if a worker has a job-related injury or illness that's not covered by workers' compensation insurance. 
  • Employment practices liability insurance: Covers your business against accusations of illegal employment practices such as discrimination and wrongful termination.
  • Environmental liability insurance: Covers your business if an accident results in your company polluting the land, water, or air.
  • Errors and omissions insurance/professional liability insurance: Covers against lawsuits arising from negligent professional services or failing to perform professional duties. Coverage is needed by lawyers, accountants, architects, or anyone who provides a service to clients for a fee. 
  • Event liability insurance: Covers the varied exposures related to special events, with coverage tailored to your specific event, from small, one-time events to large, elaborate affairs.
  • Fire legal liability insurance: Covers the insured's legal liability in cases where a tenant causes fire damage to a rented property.
  • Liquor liability insurance: Covers bodily injury or property damage caused by contributing to a person’s intoxication, giving alcoholic beverages to a person under the legal drinking age, or violating laws or regulations relating to the sale, gift, distribution or use of alcoholic beverages. 
  • Media liability insurance: Covers claims of defamation, invasion of privacy, infringement of copyright, and plagiarism specifically for media companies such as publishers and broadcasters. 
  • Premises liability insurance: Covers third-party damage, injuries, or illnesses that occur due to an accident on your business property. Premises liability coverage is typically included in a general liability policy. 
  • Product liability insurance: Covers third party damage, injuries, or illnesses caused by a defect in a product your company produces, sells, or promotes. 
  • Public liability insurance: Covers injuries, accidents, and property loss suffered by members of the public (customers, visitors, delivery personnel) on your business premises.

Extend Your Business's Coverage with Professional and Limited Liability Insurance

Your business's coverage can be topped off with even more protection offered by professional liability insurance and limited liability company (LLC) insurance. LLC's allow business owners to separate their personal assets from their business, but they don't protect the business itself against various claims.

LLC insurance can protect your company against numerous different types of lawsuits. Professional liability, on the other hand, is important to guard your business against unintentional professional errors that cause harm to others, which in turn can get you sued.

The amount of business liability insurance you need will depend on several factors, including the kind of business you have and its operations and risk level. An independent insurance agent can help you assess your business's risks and get set up with all the coverage you need.

The cost of your business liability insurance will vary based on your business's size, operations, risk level, and more. However, the average cost of general liability insurance alone for businesses is about $350 annually. The cost of all your liability coverage combined could be much higher than this, depending on the type of business you run.

Your business may not be legally required to carry liability insurance. Liability insurance is still a must have for all kinds of businesses, however, because without the proper protection, just one lawsuit could lead to bankruptcy.

Liability insurance covers your business from legal costs in the event of a lawsuit against your company by paying for attorney, court, and settlement fees, regardless of if you're actually at fault for the claim.

Yes, independent contractors still require liability insurance because they have the same risk of getting sued as a larger company does. Independent contractors need liability protection against lawsuits the in the same way as a big business entity.

If you cancel your business liability coverage, you'll be left without valuable and imperative protection against lawsuits against your business. After you cancel your policy, you'll be at risk of paying out of your own pocket for any unforeseen legal claims of bodily injury or property damage to others. You'll have to pay for attorneys and other costs yourself.

The Benefits of an Independent Insurance Agent

When it comes to helping insurance customers find the absolute best business liability coverage, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers who sell business liability insurance, deliver quotes from a number of different sources and help you walk through them all to find the best blend of coverage and cost.

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TrustedChoice.com Article | Reviewed by Jeffrey Green

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chart - https://www.statista.com/statistics/1119263/average-cost-b2c-general-liability-insurance-premiums-written-usa/

https://www.nationwide.com/business/insurance/small-business-liability/

https://www.iii.org/article/commercial-general-liability-insurance