Every business faces potential legal liability to another person or company as the result of mishaps, accidents and negligence. When legal claims result in court cases, even a claim of slander may become terribly expensive. A properly designed insurance program can protect your business against these risks.
An independent agent in the Trusted Choice® network can help you assess the specific liability risks your company may face, whether due to the products you produce or sell, the services you provide, or site-related incidents where customers and others may be at risk. Find a local member agent today to compare multiple small business liability insurance quotes and find the right coverage for your company.
Expenses due to legal action against a business can include a range of costs, including:
As a business owner, your legal liability can stem from many different business-related activities, from providing services and selling products to causing an accident while driving for work-related purposes. For that reason, there are multiple types of liability protection.
Liability insurance options include:
The specific small business liability insurance you need, and the limit amounts that make the most sense for you, will depend upon the nature of your business. Be sure to work with a knowledgeable agent who can help carefully review your risks and tailor a package to your needs.
Forming an LLC, or limited liability corporation, is a great idea as one of the critical measures to protect your business, while also shielding your personal assets in the event that your company is sued.
However, the protection of an LLC does not completely eliminate your personally liability. Many small business owners mistakenly believe that a limited liability corporation status is like insurance for their personal assets. But in fact, there are a number of circumstances in which your assets can be at stake, such as:
Some of these activities and errors fall into a category called "piercing the corporate veil," which essentially means that a business owner in some way failed to keep a complete separation between personal and business activities. Whether knowingly or accidentally, neglecting to keep your business records straight can put you at risk, even with an LLC in place.
An umbrella policy can serve as additional limited liability insurance for small businesses that want to ensure they have full protection. Ask your agent whether such a policy makes sense for you or for your business.
Many small business owners do not realize that liability policies typically also provide for the cost of a legal defense for an allegedly negligent act covered under the policy. This is an extremely valuable benefit as the cost to defend a suit through trial can be in the hundreds of thousands of dollars.
In most cases, the legal defense protection is in addition to the limits of liability provided by the policy. In a few cases, defense costs can be written to be "within the limit" meaning that your legal defense costs will be taken out of your liability limits.
It is important to have an agent who understands these distinctions and can advise you accordingly.
Your general liability policy will have some exclusions. It is a good idea to examine these limitations and purchase additional coverage if you have risks in that area. Policies can differ, but the primary exclusions in most general liability policies are:
In addition to reviewing the risks your general liability insurance will not cover, you also want to review all the terms of your policy. For example, a claim arising from a known risk that you did not disclose to your insurance company can lead to a denial of coverage. It is important to fully describe your business activities on the initial application so your policy will fully cover your exposures.
An independent agent in the Trusted Choice network who specializes in commercial insurance can be an excellent resource when determining the small business liability insurance you need. These agents have access to multiple providers and can help you find the specific coverage for your needs and budget.
Whether you need professional liability insurance for your small business depends on the nature of your work. If you give customers advice, for example, you may need a professional liability policy. This includes people who do legal or accounting work, those who provide medical services, and those who provide design consulting, such as graphic designers, landscapers and architects.
Examples of professional liability risks include:
Typically those who need errors and omissions liability need a professional license in order practice. If you feel you have any risks you are not sure about, you should discuss it with your attorney and your insurance agent.
Most small business liability insurance companies sell umbrella policies in units of $1 million. An umbrella liability policy does two things:
As an example, suppose you have a company picnic on a local lake. One of your employees brings a personal boat to the picnic and causes an accident while giving other employees a ride. Obviously, the boat owner has responsibility; however, because the boat was engaged in a company function, the business can also be sued.
If your company does not own a boat, chances are that you do not have watercraft liability insurance. However, most umbrella policies will cover this kind of incidental exposure subject to a large deductible (usually $25,000).
Umbrella policies are not standard, so you should carefully examine your policy for any unusual exclusions or restrictions. This is why it is important to work with a knowledgeable agent who can provide complete customer care and ensure that you have adequate small business liability insurance.
Getting the right liability insurance for your small business starts with assessing your specific risks and then comparing policies, options and quotes. You will also need to choose the liability limits that make the most sense for you. To ensure that you are getting the most competitive rates, be sure to work with an independent agent who can help you compare rates from multiple insurance providers.
Independent agents in the Trusted Choice network have access to a wide range of insurance companies. A local member agent who specializes in commercial insurance can not only help you find the right coverage, but can also look for small business insurance discounts. These may be available if you have certain professional memberships, for example, of if you combine several policies under one company.
Even if your coverage must be assembled through several different insurance providers, a local independent agent can help you get all of your coverage in one place. Contact a member today to get started comparing small business liability insurance options and costs.