Types of Liability Insurance for Your Small Business

Editor's Note: Take a look at our featured best practice, Complete Guide to Risk Management (M_o_R) (129-slide PowerPoint presentation). This document is a 129-slide PowerPoint presentation that provides a Risk Management Overview based on the M_o_R methodology that has been recognized worldwide as the leading Best Practice framework for successful management of Business Risk. The document is easily customizable, content can be [read more]

* * * *

If you own a business, you ought to be thinking about liability insurance. This is the shield you can use to protect yourself in case something goes wrong in your industry. The only problem is that there are so many different types of liability insurance, and it could be hard to choose the right one. Below, we will break down some of the most common types of liability insurance, so you can choose the one that suits your business best.

Why You Need Liability Insurance

A business owner never knows when something could go wrong with their business, products, or employees. Because of this uncertainty, they need to protect their business investment from anything that might cost them money or time should they need to go to court to defend claims made against their business. Liability insurance removes this uncertainty by providing a safety net that a business owner can fall back on should anything bad happen.

Public and General Liability Insurance

Most types of general liability insurance are often thought to be the same, but they are not. General liability insurance is generally divided into public liability insurance and product liability insurance. If your business has a small budget and can afford just one type of insurance, this is the one you should get.

If you want to get coverage quickly, you should visit The Hartford. They are a reputable insurance provider, and they can get you covered in a few minutes. They offer lots of different types of insurance options, so you can find just what you need easily and quickly.

General liability insurance can cover property damage, medical costs for injuries on your premises, and damage caused by your products.

Public liability insurance covers something that happened in your business, but that was out of your control, like someone tripping on the loose carpet in your store.

Commercial Liability Insurance

This is the broadest type of business insurance as it covers workers’ compensation for medical costs arising from work-related injuries, public liability insurance, and property insurance.

Employer Liability Insurance

Employer liability insurance can cover workers’ compensation, for example, when a worker needs their medical bills and wages paid if they are injured at work. That said, a worker can still sue a business owner if they feel that the compensation they got was not enough. If this happens, this extra money is unlikely to be covered by the insurance you already have.

Product Liability Insurance

Product liability insurance covers you and your business from legal and court courts associated with claims of property damage, financial losses, or bodily harm arising from the use of your product. It is one of the most important types of business insurance because anyone can lodge complaints about your business at any time, and you ought to be prepared.

The Importance of Liability Insurance

If you are a business, a liability insurance policy can shield you from a lot of legal and court costs. It can also help separate you from the company so that if the business gets sued and goes bankrupt, you would not be on the hook, as the company and you are different entities.

If you are a worker, people are much more likely to hire you because they know that should anything happen during the contract, they would not be on the hook.

Conclusion

Every business must have some form of business liability insurance. For the best outcome, go with one that covers as many areas as possible such as commercial liability insurance.

Do You Want to Implement Business Best Practices?

You can download in-depth presentations on Risk Management and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.

For even more best practices available on Flevy, have a look at our top 100 lists:

• Top 100 in Strategy & Transformation
• Top 100 in Digital Transformation
• Top 100 in Operational Excellence
• Top 100 in Organization & Change
• Top 100 Management Consulting Frameworks

These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.