What You Need to Know About Liability Insurance | Personal Branding Blog
General liability insurance for your business is something that you want to invest in to protect your interests and your assets. However, liability insurance is intimidating to some because it’s easily over complicated. This article looks at the key information for liability insurance so you can determine what you need for your business.
What Does General Liability Insurance Cover?
Liability insurance protects your business assets and provides compensation for damages to individuals or property that you or your employees are liable for. The insurance also covers any legal fees you incur when you hire a lawyer to work for your case, and then pays the settlement or compensation amount the other party is awarded.
You should know that small business lawsuits can cost anywhere from $3,000 up to $150,000, according to a 2005 study done by the Small Business Administration. Since that study was done over 10 years ago, the actual number that’s more relevant to the economy today is closer to $4,000 to $190,000.
Four of the main categories of liability that small business insurance can protect your business from is bodily injuries to a third party, property damage to a third party, product liability and advertising injury. Advertising injury includes copyright infringement and slander.
What Does General Liability Insurance Not Cover?
Just as you need to know what liability insurance will cover for your business, you should also know the things your policy won’t cover. Your policy should clearly outline the coverage you receive, but it’s helpful to have a general idea while you’re shopping around for a policy.
Some of the things that general liability insurance won’t cover include employee injuries, employee discrimination lawsuits, professional errors, fraud and damages to your business property.
In addition to your general liability insurance policy, you may want to purchase property insurance, business vehicle insurance and workers’ compensation insurance. Some companies will bundle these insurance policies together and call it a “small business policy” or a “business owner’s policy” in order to provide you with affordable, comprehensive coverage.
How Do You Determine If Your Business Needs It?
Your business may need liability insurance. A good way to determine if you need it is to consider the perceived risk and type of business you have. You may want to talk to a licensed insurance broker to determine your specific business needs.
You need to look at your business objectively and assess your risk to determine if you need liability insurance. If you’re at risk of being sued because of the services you perform, for any reason, you should purchase liability insurance.
No matter if you have a home business, a freelance business or a small business, you may want to purchase liability insurance just in case something was to happen, so you’re protected. You never know when things can go wrong, and with policies being affordable, it’s coverage that you should consider an investment for your business.
What Is Subrogation?
Subrogation is an essential part of a liability insurance policy. Basically, subrogation is the legal right for your insurance company to take legal action on your behalf.
An example of this is when an insurance company needs to sue another insurance company after you had an automobile accident. Your insurance company is able to do that in your name because subrogation is in place in your policy. Subrogation exists to help lessen the burden your insurance agency has for your claims when a third party is at fault.
How Is the Cost of the Policy Determined?
The cost of your general business liability insurance will vary based on your individual case and the company you choose, but there are several factors that influence the cost. A small, home-based business is likely going to pay less for a liability insurance policy than a business with many employees.
These factors include:
- Your business type
- The location of your business
- How many employees you have
- The amount of risk your company is exposed to
Generally, liability insurance for small businesses is affordable and you may not need a full business owner’s policy, the way a larger business might. The cost of the coverage varies based on the factors above, but you can expect to pay around $400 to $500 a year, which is very affordable when you break it down into monthly premiums.
If you have a business, you likely need liability insurance to protect yourself. It’s always good to be able to look at insurance policies and other protections objectively, to determine what you need for your business so you’re able to make an informed decision. The above information should have provided you with answers to some of your most common questions, but if you have any other concerns, you should contact your insurance provider.