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Any business owner who’s in any kind of business should take precautions to protect themselves from liability.
In this article, we’ll discuss everything you need to know about liability insurance and how it can protect your business.
What Is Liability?
According to Merriam-Webster, liability is defined as “the quality or state of being liable.”
While you might think that this is a pretty clinical and general term, this description actually does a good job of summing up its legal meaning, as well.
Liability in the case of business insurance refers to the legal responsibility of an establishment to an individual, most often the customer.
This means that if something detrimental happens to a patron within the business establishment or because of their product, advice, or employee, the business is liable for any damages incurred.
Why Do You Need Insurance For Liability?
Business owners are automatically held liable for all incidents that happen inside their establishment, regardless if the damage caused is physical, reputational, or even financial.
If you don’t have a commercial insurance policy that covers liability, then you’ll be forced to pay out of pocket. Additionally, if a customer decides to pursue the case in court, things can become expensive fast.
On the other hand, if you do have a liability insurance policy, it will be up to your provider to cover the costs of the damages. More than that, you would also be protected from further legal actions once a settlement has been made.
Thus, getting liability insurance shouldn’t just be an optional business decision – it a crucial step if you want to keep your business afloat for a long time.
Types of Liability Insurance
Several types of liability insurance protect different aspects of your company. In this section, we’re going to talk about the main types of liability insurance.
- Product liability. This protects businesses from any harm that their product might have done to a customer.
- Professional Liability. This protects consultants and other professions against financial damage caused by negligence, inability to perform, or mistakes in their practice.
- Director and officer liability. This protects high-ranking members (such as the board of directors, CEOs, etc) against financial damages in case a suit is filed.
- Umbrella liability. This type of coverage acts as an add-on to any liability insurance. Umbrella insurance increases your policy limit when claims go above your regular insurance policy limits.
- Comprehensive general liability. The most common type of commercial liability for any business establishment, this type of policy covers all crucial liabilities and is made to fit the specific conditions of the business.
- Cyber Liability Insurance. This type of coverage insures businesses against the financial costs of cyber security attacks that expose stakeholders’ data. Some malware may hold important, sensitive information for ransom, while others will simply steal sensitive information. When this happens, cyber liability insurance will typically cover the cost of compensation for the affected parties.
Liability Insurance Coverage
Generally, liability insurance for businesses is tailor-made to their specific risks. However, there are industry-standard coverages that are common for all liability insurance, such as:
- Bodily injury
- Employee illness, injuries, and disabilities
- Property damage
- Harm to reputation
- Legal costs
How Much Is Liability Insurance
The monthly premium for this type of policy depends on several factors, such as:
- Business size
- Industry,
- History, and even
- Location
If you want to have the best premium rates for your business, reach out to us at Magnum Insurance today.
Getting Liability Insurance
Liability insurance is necessary if you don’t want your business to be ruined by an unexpected accident. With this policy protecting your business, you can rest assured that you have a financial safety net in case the worst happens. Call us today at Magnum Insurance to know more!
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