Liability insurance is important for the protection of small business from possible lawsuits in the future. The difference in policies is huge and the coverage for different classifications varies in costs. Learning more about liability insurance goes a long way before you shop for a policy. The subsequent paragraphs provide an overview.
- Liability insurance comes in many different forms. Commercial general liability (CGL) is a broad insurance product. Its coverage includes accidents, negligence, and injuries resulting from a business’ mistakes. A small business is prone to facing a wide variety of damage charges. A few examples would be property damage, personal injuries, slander, and libel. Coverage of product liability insurance includes legal fees for lawsuits that involve a defective product. Coverage also includes property or personal damage charges resulting from the faulty product. Professional liability insurance covers damages from services. This is also known as errors and omissions coverage. This is for the companies that provide services instead of products. To provide an example, healthcare professionals are recommended to have medical malpractice insurance. Aside from this, there are more types of insurance catered to specialty businesses. Companies that are only involved in sales through the internethave special policies. The type of coverage necessary for a business is decided by the business’ nature.
- The type of business has an influence premium amounts. Businesses are classified by the insurers into various categories. Annual premiums are determined with the help of these categories. All businesses face risks of different degrees and some businesses may face more risks than the others. An example would be a company that provides window washing services to skyscrapers, which is definitely riskier than a tax preparation company. Most insurers consider the number of claims similar businesses have made to have a better idea of what they should charge. They usually use the North American Industry Classification System. Talking to an agent will help in learning more about where a particular business falls under which risk classification. The amount of sales made and the size of the business’ payroll are also considered in premium amounts.
- The coverage of liability insurance does not include everything.Benefits for employees with injuries and illnesses related to work are not offered by the general liability coverage. This is usually covered by the Workers’ Compensation insurance. Liability coverage also does not include intentional acts and damages caused from said acts. Examples of intentional acts are fraudulent behavior, fights erupted from employees, and criminal activity.
- It may be required to have liability insurance. Liability coverage for some professions is required by a number of states. If a vehicle is used by a business and is also used by employees, then auto liability coverage is recommended. The amount of minimum auto liability coverage varies from state to state, though most states have a standard minimum. Discussing the amount with an agent is necessary. When an allegation arises, liability insurance will cover litigation claims, defense costs, and other legal fees.
- Decreasing risks is entirely possible. Insurance companies may classify a company to be low risk if business owners take precautionary measures to reduce or entirely eliminate risks. Fire alarms, sprinkler systems, smoke alarms, and numerous fire extinguishers will help lower risks. It is also important to set guidelines for employees’ training in various safety practices. Make sure that the equipment is accessible and readily available. Proper maintenance is expected if vehicles are being used for business purposes.