Business Liability Insurance

Business liability insurance protects your small business in the event of a lawsuit for personal injury or property damages. Business liability insurance will usually cover the damages from a lawsuit along with the legal costs. Depending on your business needs, liability insurance can purchased in many forms.

Who Needs Business Liability Insurance?

Over 78% of all U.S. businesses are structured as a partnership or sole proprietorship, according to Lakhani Insurance. For the majority of small business owners, this form of ownership puts your business and personal liabilities at risk. Owning business liability insurance protects both your business and personal life from financial ruin.

A common misconception of a limited liability company (LLC) or an incorporated company is a business owner is protected from personal liability and liability insurance is not necessary. You can be personally liable if:

you have signed a personal guarantee for a loan

personally you have injured someone

you have acted in an irresponsible or illegal manner

you do not operate your business as a separate entity

Types of Business Liability Insurance

General Liability Insurance: This form of business liability insurance is the main coverage to protect your business from: injury claims, property damages, and advertising claims. General liability insurance also known as Commercial General Liability (CGL) may be the only type of business liability insurance you need depending on your business situation.

Professional Liability Insurance: Business owners providing services will need to consider having professional liability insurance known as errors and omissions. This coverage protects your business against malpractice, errors, negligence and omissions. Depending on your profession, it may be a legal requirement to carry such a policy. Doctors require coverage to practice in certain states. Technology consultants often need coverage in independent contractor work arrangements.

Product Liability Insurance: Small businesses selling or manufacturing products should be protected in the event of a person becoming injured as a result of using the product. The amount of coverage and the level of risk depends on your business type. A retailer of scrap book supplies will have far less risks than a wood stove builder.