If you’re reading this, chances are you are either starting a business or looking to strengthen your business. Business liability insurance keeps you safe from incidents that comes out of nowhere and might hit you harder than you expect.
What is Business Liability Insurance
Business liability insurance protects your company against unforeseen circumstances that could make your business go sideways and affect your finances hugely. Business liability insurance covers your company when sued for something that happened as a result of your normal business operations.
It could be anything from your customer slipping on your freshly mopped floor to a client claiming your advice cost them millions.
When you think of business liability insurance, think of it like a buffet of different coverage options. Just like a buffet you need to choose wisely to get the best value for your business.
Types of Business Liability Insurance
There are various types of business liability insurance. Let’s discuss them
1. General Liability Insurance: General Liability Insurance protects your business against things like bodily injury, property damage and advertising injury claims. With this insurance you cannot be worried if a client trips over your briefcase during a meeting breaks an arm because you are fully covered.
2. Professional Liability Insurance: This is known as Errors and Omissions (E&O) insurance, this is for service providers out there. Are you worried your client will claim your work caused them financial harm? This insurance coverage have you covered as your professional bodyguard.
3. Product Liability Insurance: There are business who are into selling physical products. It is essential to insure those products against the harms or dangers it can cause to a consumer. If your revolutionary new gadget accidentally sets someone’s house on fire, the product liability insurance helps cover the damages.
4. Cyber Liability Insurance: In this digital age, it is becoming increasingly important you protect your business against data breaches and other cyber crimes which are on an increasing rate daily.
5.Employment Practices Liability Insurance (EPLI): This insurance covers claims from employees related to issues like discrimination, wrong termination or harassment. Think of it as an HR insurance.
Why Business Liability Insurance is Important
You might feel your business is too small or too secure to need business liability insurance, you might not be wrong but you can never tell when an unforeseen circumstances will hit you hard.
You don’t want to wait until these happens before your protect your business against the least things like an employee slipping on a freshly mopped floor or a customer trips over your briefcase at your shop then you having a court case. In our litigious society people are quick to sue and business liability insurance is your financial forcefield against these threats.
How to choose the right business liability insurance
Choosing the right the business liability insurance can be really challenging, here’s how you can choose the the right coverage.
1. Assess your risks: Take a good look at your business and the things that could go wrong. What are your vulnerabilities ? This is exactly what will help you determine the type of coverage you need.
2. Shop around: To get the best option, you need to obtain business insurance quotes from multiple providers as prices and coverage options varies. This is where you select the best coverage option tailored to your need. Don’t just settle for the first quote you receive.
3. Read the fine print: It is important you read through the insurance policies to understand exactly what is covered and what is not. This is not something you should do carelessly, no matter how difficult reading through the policy is, don’t fall for the temptation of not reading the terms.
4. Consider a Business Owner’s Policy (BOP): Business Owner’s Policy bundles general liability insurance with property insurance, it comes at a lower price than buying the policies separately. You should always consider this as it’s great.
5. Work with an Agent: Never work alone, get an experienced insurance agent who can help you navigate through the complexities of business liability insurance. With an experienced agent, you are sire to get the best coverage for your needs.
6. Reassess Regularly: As your business grows and changes, so do your insurance needs. You must be thorough in assessing and reviewing your policies or coverage options annually to be sure it’s still the best you can get.
What is the cost of business liability insurance
The cost of business liability insurance varies widely depending on several factors like:
The size of your business
Your industry
Your claims history
The type and amounts of coverage you choose
As a small consulting firm, you might pay a few hundred dollars a year for a basic policy but a large construction company will definitely pay tens of thousands. It is important you know that the cost of not having an insurance can possibly be higher as one major lawsuit could bankrupt your uninsured business.
Common Misconceptions about business liability insurance
Many business owners adopt certain Misconceptions when it comes to business liability insurance, some of this Misconceptions are entirely wrong. Here are some of these myths.
Myth: My business is too small to need insurance.
Truth: There is no business that is to small when it comes to insurance. Lawsuits doesn’t know size. All business are vulnerable just as large ones are vulnerable
Myth: I have an LLC, so I’m already protected.
Truth: Yes, an LLC only provides you with some personal asset protection, it does not protect your business assets or shield you from all types of liability.
Myth: Business Liability insurance is too expensive.
Truth: You should consider the potential cost of lawsuit, when do this, you will realize that business liability insurance is quite affordable with what you stand to gain.
Myth: I can always buy insurance later
Truth: It’s never too early to get an insurance. You actually need an insurance from day one of your business as you don’t know when an incident might occur. Most policies will not cover incidents that happened before you bought the policy.
Examples of Business Liability Insurance in Action
1. The coffee Shop Slip-and-Fall: A customer at a small coffee shop slipped on a wet floor and broke their hip. With an insurance, the shop’s general liability covered thr $100,000 medical bills and lawsuit, allowing the business to continue operating unlike the business handling all this by themselves.
2. The consultant’s costly advice: This is a situation where a management consultant’s advice led to a client implementing a strategy that backfire, costing their business millions. Now the consultant is being sued for a misleading or bad advice. The consultant’s professional liability insurance coverage was used to cover all the legal fees and settlement, thereby saving their business. You can never be too accurate that’s why it’s best to be insured always.
The E-commerce Data Breach: As an online retailer who suffered a data breach, exposing customer credit card information, the cost of notifying customers, providing credit monitoring services and defending against resulting lawsuits falls under the business cyber liability insurance. Cyber liability insurance has your business covered when it comes to cyber thefts or hazards like this.
How to maximize your business liability insurance
You can always get the best from your business liability insurance and we will show you how to go about that.
1. Understand your Policy: You need to know what is covered from your policy and what is not. This way you know how to be prepared. Always ask your insurance agents questions, it’s better to ask than to be taken unaware.
2. Implement Risk Management Practices: Because you have have insured your business doesn’t mean you should be careless and shouldn’t take conscious actions in preventing these incidents. Always remember, the best insurance is the claim you never have to make. Safety protocols and best practices should be implemented in your business to minimize risks.
3. Keep Good Records: In the event of a claim, a good documentation will be your savior. It’s important you have a good structure for keeping records of all business activities and transactions. These records will come in handy during time for claims
4. Be Proactive: You and your insurer are a team. Therefore, if you think there’s an incident that might lead to a claim, notify your insurance provider right away. Most of this policies require prompt notification.
5. Consider Umbrella Coverage: You always need an extra protection and umbrella insurance coverage policy provides you an additional liability coverage above and beyond your standard policies. Umbrella Insurance coverage is an extra layer of protection you need for your business.
The Future of Business Liability Insurance
The business world evolves on a daily basis, so do business liability insurance policies and offers. Here are a few trends you can watch out for:
1. Increase Focus on Cyber Insurance: With the digital age and an increased cyber threats, there will be high need for comprehensive cyber liability insurance coverage.
2. Gig Economy Coverage: Every day, there are more freelancers and gig workers, and this makes it clear that there will be a need for a new insurance products to accommodate this non-traditional work arrangements.
3. Climate Change Considerations: There are extreme weather events being conducted more often, business may need to consider additional coverage for climate-related risks.
4. Artificial Intelligence Automation: AI has began to play a bigger role in many businesses, new liability insurance issues is bound to arise leading to new insurance products.
Conclusion
Business liability insurance is not just a safety net, it is a crucial tool that allows you to take calculated risks and grow your business with confidence. With business liability insurance you are sure protected against any unforeseen circumstances like lawsuits from employee or clients.
