What Is Business Liability Insurance?
Business liability insurance is a policy that covers financial liabilities incurred such as legal defense fees and protects the financial interests of the company and its owners when they face formal lawsuits or any third party claims.
As much as the business liability insurance helps cover certain unexpected expenses, the cost of coverage is still influenced by the type of business being insured and its location. For example, if a company is located in a flood-prone region, it would probably pay more.
There are three main types of business liability insurance, and they include
- general liability insurance,
- professional liability insurance
- product liability insurance.
Understanding Business Liability Insurance
These days, it isn’t unusual to see small business owners putting their own personal finances at risk while they battle lawsuit claims against their business.
It doesn’t even matter if the business is structured as a partnership, sole proprietorship, or limited liability corporation; every business entity needs general liability insurance.
The Need for General Liability Insurance
Although it isn’t a legal requirement to purchase general liability insurance except in some states where it is required as license criteria for construction contractors or developers, most small business owners still purchase business insurance for small business shortly after starting up their business.
Some of the situations that can push a small business owner into getting a general liability insurance policy are as follows:
- Application for a professional license, especially by real estate agents, dentists, and accountants
- Signing an office lease or renting a workplace
The Amount of Coverage Needed
As a business owner, you need to choose policy limits that reflect the level of risk faced by your company. You can even customize your policy by adding endorsements (product liability insurance, liquor liability insurance, and hired and non-owned auto insurance) that insure specific risks not covered by the initial coverage.
Information to Be Provided While Applying for a Business Insurance Coverage
Business insurance for small businesses cannot be obtained without providing certain information, such as the amount of revenue earned, the number of employees, your claims history, your company’s level of risk, and the amount you’re willing to pay as premium.
The Cost of Business Liability Insurance
As mentioned above, business liability insurance coverage is influenced by the business’ perceived level of risk. For example, a building contractor who deals with heavy and dangerous machinery is likely to pay more premium than an accountant seated safely behind a desk.
Businesses with low risks are advised to consider a policy that combines general liability and property insurance at an affordable rate, known as the business owners’ policy (BOP).
However, additional or new policies should include exclusion clauses so there won’t be duplication of coverage from other insurance providers, thereby reducing costs. The experts at Udell Family Insurance are here to ensure that you have the right insurance in place. We are ready to assist you with all your coverage needs today.