If you’re wondering if your business needs liability insurance, consider this: A single lawsuit can put you out of business. If you are sued, the cost of your legal defense may be more than your businesses can handle, even if you are innocent.

While some risks can be avoided with a heavy dose of precaution, risk can never be completely eliminated. To protect your business against lawsuits, you need liability insurance. There are several types of commercial liability insurance. Not all of these are required, but they’re all a good idea.

General Liability Insurance

Commercial general liability insurance covers property damage and bodily injury suffered by third parties. For example, if one of your workers accidentally damages a client’s property, commercial general liability insurance would provide coverage for the claim.

Although general liability insurance is not typically required for all businesses by law, certain professional licenses may require commercial liability insurance. If your business requires a contractor license in order to operate, for example, you may be required to show proof of general liability insurance.

Even when general liability insurance is not required by the state, it may be required by others. Many partners and clients do not want to do business with companies that do not have this vital coverage, and landlords may not want to lease property to a company without coverage. Many contracts stipulate that commercial general liability insurance is required.

Professional Liability Insurance

Professional liability insurance is sometimes called errors and omissions insurance, which may give you an idea as to what it covers. If a client claims that the advice you gave – or the advice you failed to give – caused harm, professional liability insurance will protect you from the resulting claims. 

Some professions, such as doctors and lawyers, are required to carry professional liability insurance. Other professionals, such as real estate agents, financial planners, architects and engineers should have this coverage, even if it is not required.

Requirements are established by the state, so they will vary depending on where you live and do business. As with general liability insurance, professional liability insurance may also be required in various contracts.

Employment Practices Liability Insurance

If you have employees, employment practices liability insurance provides important protection against claim alleging discrimination, harassment or wrongful termination.

Although your business may not be legally required to carry employment practices liability insurance, not having it could put you at considerable risk. Employment practices liability lawsuits are common, and even an unfounded claim can cause serious problems for your company. In 2018, there were 7,482 charges filed with the Equal Employment Opportunity Commission in just the state of Texas.

Cyber Liability Insurance

If you store or transmit private information and customer data, you may want to consider cyber liability insurance. It provides coverage in the event of a cyber attack or data breach.

Commercial Auto Liability Insurance

Commercial vehicles, like personal vehicles, must meet the state’s requirements for auto liability insurance coverage. If your business owns any vehicles, those vehicles must be properly insured.

Commercial auto policies tend to have much higher limits than personal auto insurance policies. While lower limits are possible, many companies opt for limits as high as $1 million. This protects the business and its assets against lawsuits.

Businesses may also need additional types of auto coverage. Often, employees use their personal vehicles for business purposes, such as delivering goods or transporting clients. However, personal auto policies may exclude commercial activities. If an accident occurs, the injured party will likely go after your business for compensation. This is why you need hired and non-owned coverage.

Coverage for Your Business

This is not a complete list of insurance products. The type of liability insurance your company needs will depend on many factors, including where you operate, with whom you do business, and what type of services you perform. A licensed insurance agent can help you find the right coverage to protect your business. Get a business insurance quote here.

Sources

·         https://www1.eeoc.gov/eeoc/statistics/enforcement/state_18.cfm