Do I Really Need Liability Insurance?

Would you consider closing up your store at night without locking the door? Of course not. Prudent business owners know they need to take action now to protect the business against a potential loss in the future. That’s the idea behind liability insurance.

Most owners have protection against loss from fire or theft but what if a customer falls in your store and sues you for damages?

While your insurance agent can advise you about what’s best for your small business, consider whether liability insurance should be part of your protection plan.

What is Liability Insurance?

Liability insurance can protect your business against the financial loss resulting from a legal judgment for accident, injuries, or negligence. While coverage varies, the plans may cover legal costs and legal payouts for expenses like bodily injury, property damage, medical expenses, loss of wages, libel, or slander.

It’s important to consider that potential liabilities can come from many sources. For example, a customer could suffer financial loss from the advice you have given them. Employees might be injured while stocking merchandise. Suppliers might incur damage to their truck when your loading door malfunctions. A member of the general public could lose important data from your unsecured Wi-Fi.

Not only might your business by liable for the damages but you may incur legal costs to settle the issue. Like property insurance for fire damage, you can recover from these potential losses with liability insurance.

Different Choices for Different Needs

In addition to a general liability policy, businesses can also choose from specialty types of liability insurance based on their needs. Here are some of the choices available:

  • Professional liability insurance – Protects a business against malpractice, errors and negligence resulting from the service or advice you provide. You may be liable even if you did not make a mistake. For example, a client may not be satisfied with the results of a treatment you provided and sue. Many professionals have this kind of coverage including medical staff, accountants, spa staff, hairstylists, or personal trainers.
  • Product liability insurance – If you make, distribute or sell a product, this coverage protects against financial loss if the product is found to be defective and causes injury. For example, a greenhouse that produces its own fertilizer could suffer financial loss from a customer who was injured while applying it to his lawn.
  • Home-based insurance – Just because you operate a business in your home doesn’t mean your homeowner’s policy covers you. In fact, many exclude loss from running a business in your home. Some allow you to purchase add-on coverage but you may want to consider a separate plan that provides the level of protection your business needs.

It would be unthinkable not to protect your business against the loss you’d incur from a fire. But what about the damage you cause to someone else? Consult with your insurance agent to determine what level of liability insurance is right for your small business.

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