Liability Insurance: Protecting Your Small Business

Small business ownership is a dream for many, but with it come risks and uncertainties. Liability insurance provides a vital safeguard, offering protection against a range of unforeseen events. In this comprehensive guide, we’ll dive into the ins and outs of liability insurance and the indispensable role it plays for almost any business. If you’re not clear which coverage you need, you’re not alone: 96% of owners don’t know according to a recent survey.1 Let’s explore the key categories, their respective coverage areas, and ways to save:

General Liability Insurance

General liability insurance forms the cornerstone of liability protection for businesses. It provides coverage for bodily injury and property damage claims that occur on business premises. Imagine a customer slipping on a wet floor in your café, resulting in a broken arm. General liability insurance steps in to cover medical expenses and potential legal fees, ensuring your business remains financially secure. From slip-and-fall accidents to property damage, this policy offers security by covering medical expenses, legal fees, and potential settlements.

Product Liability Insurance

For businesses involved in manufacturing or selling products, product liability insurance can be indispensable. It provides coverage against claims arising from injuries or damages caused by defective products. For example, a chair you manufacture is found to have a design flaw, causing injuries. Product liability insurance can handle legal claims and compensate affected parties for injuries or damages. Whether it’s a malfunctioning electronic device or tainted food product, this coverage helps ensure businesses can address liabilities.

Professional Liability Insurance (Errors & Omissions)

Professional liability insurance, also known as errors and omissions (E&O) insurance, is tailored for service-oriented businesses. It safeguards against claims of negligence, errors, or omissions in the services provided. Consider a scenario where a client accuses your accounting firm of providing erroneous financial advice, resulting in significant financial losses. Errors and omissions insurance provides coverage for legal defense costs and potential settlements, helping shield your firm from financial turmoil. From legal advice to architectural designs, professionals can mitigate financial losses resulting from alleged mistakes.

Employment Practices Liability Insurance (EPLI)

In today’s complex workplace environment, employment practices liability insurance (EPLI) offers critical protection against claims of wrongful employment practices. For instance, if a small tech startup faces allegations of gender discrimination in its hiring practices, employment practices liability insurance would cover legal defense costs and any damages. From allegations of discrimination and harassment to wrongful termination, this policy helps businesses with certain legal expenses and potential damages arising from employment-related lawsuits.

Cyber Liability Insurance

With the increasing threat of cyberattacks and data breaches, cyber liability insurance has emerged as a vital component of risk management strategies. It covers the costs associated with data breaches, including forensic investigations, customer notifications, credit monitoring services, and legal defense expenses. If a small e-commerce store experiences a data breach that exposes customers’ credit card information, cyber liability insurance would cover the costs of investigating the breach, notifying affected customers, and defending against any lawsuits arising from the incident.

Commercial Auto Insurance

When businesses rely on vehicles for operations, commercial auto insurance provides essential protection against accidents, injuries, and property damage. For example, if a small landscaping business’s truck collides with another vehicle while traveling to a job site, depending on the level and type of coverages commercial auto insurance could cover the costs of medical treatment for injured parties, repairs to both vehicles, and any legal expenses associated with a lawsuit. Whether it’s a delivery truck or a fleet of company cars, this policy can safeguard against potential liabilities arising from many vehicular incidents.

Who Is Answer Financial?

As the backbone of America’s economy, small businesses face countless risks that can impede success. In addition to shopping around, the Small Business Administration advises re-assessing your risk and policies every single year.2 Answer Financial is here to make the shopping part easy. We work with some of the nation’s top-rated carriers to save our customers an average of $565 a year on insurance. Our licensed agents are ready to help you compare, buy and often save the smart way on insurance. Make an appointment today to find the right liability insurance for your needs and budget.