Your business doesn’t need to be worth millions to be sued for millions. Accidents can happen at any time, and if your business can be held responsible, you may face devastating losses. Liability insurance provides invaluable protection.
Muller Insurance is an independent agency with over 118 years of experience in the insurance industry, serving New Jersey, New York, Connecticut, and Pennsylvania. Here, we explain what you need to know about business liability coverage and why it is essential to include it with your small business insurance.
What Is Business Liability Insurance?
Accidents happen. Even when you take every precaution, it is always possible for a client to trip and fall, or for contracting work to accidentally result in broken equipment. When this happens, your business may be held legally responsible. Incurring a lawsuit comes with significant financial consequences. Even if the judgment is in your favor, legal fees add up – and for a small business, every expense matters.
Commercial general liability insurance, or CGL, is a type of policy that covers personal injury or property damage claims against your company. It protects against economic fallout from the everyday accidents that can befall any business. Additional insurance policies, such as Errors and Omissions or alcohol liability, are also available to protect against situations outside the scope of a general liability policy.
What Business Liability Insurance Covers
General liability insurance is designed to cover a variety of potential claims that might be brought against your business. These break down into three key categories:
- Bodily injury: This covers your liability when somebody gets seriously hurt on your business premises or at another location where you conduct business.
- Property damage: This covers liability when valuable property is damaged because of your business operations. For example, if jobsite equipment falls on a customer’s vehicle.
- Personal and advertising injury: This covers liability for copyright infringement, invasion of privacy, and defamation cases including libel and slander.
If a lawsuit is brought against you for any of the above damages, a general liability policy will cover legal fees. This includes the cost of defending in court and other expenses related to the lawsuit. It also pays indemnity if a judgment is made against you.
Liability claims can vary widely, however. There are some unique situations where, due to high risk or expense, general liability will not cover a lawsuit. These cases require additional policies:
- Errors and omissions: When clients sue for financial loss due to incomplete service or misleading information from your business, you need an Errors and Omissions (E&O) policy.
- Management liabilities: General liability will not cover lawsuits brought against the director or officer personally. These situations require Directors and Officers (D&O) coverage.
- Specific risks: Some businesses face unique risks, such as restaurants and bars that serve alcohol (alcohol liability policy) or manufacturers of aircraft products (aircraft product policy).
Your liability protection can be extended under an umbrella policy, also called an excess liability policy. This type of policy offers extra coverage beyond the limits of general liability. With the help of an agent, umbrella coverage can be personalized to fit your company’s unique needs.
Calculating Your Business Insurance Coverage Needs
Every business can benefit from liability insurance. However, when assessing how much coverage your company needs, it is important to understand your business and the factors that affect your liability risk. Consider these key questions before purchasing a policy:
- What type of business do you have?
- How big is your business?
- Where is your business located?
- Who are your clients and customers?
- Does your business provide service at your customers’ location?
- How many employees do you have?
- How much employee skill and experience is required?
- Do you have a sole proprietorship?
You should continue to evaluate these questions even after you purchase liability insurance. As your business grows and changes, so will your insurance needs. You may eventually want policies with a broader reach.
Work With a Small Business Insurance Agent
Determining your commercial liability needs can be complicated. Different businesses require different amounts and kinds of coverage. Even after you perform calculations and are happy with the results, the numbers may change as your business grows.
This is why it’s essential to work with an independent agent. A knowledgeable agent will understand the intricacies of liability insurance, helping you select the coverage types that best suit your business. In addition, independent agents don’t work with any specific insurance provider. This allows them to shop around, evaluate multiple options, and find the best value for their customers.
Insure Your Business Today
If your business needs liability protection, consider working with Muller Insurance. We are an independent agency based in Hoboken, NJ, and licensed in over 25 states. We work with 25 different partners, including The Andover Companies, Cumberland Mutual, Farmers of Salem, Franklin Mutual, N&D Group, and Amtrust Financial, to help clients find the best policies for their needs. To learn more about small business insurance or to request a quote, contact us or call 201-659-2403.
