Types of Business Liability Insurance
Business insurance is a way of protecting you and your business from financial loss in the case of a crisis or an accident. It is highly recommended that business owners apply for insurance to assist in covering costs related to liability claims and property damage.
The liability insurance you will choose will depend on the type of business and services you offer.
Also known as general liability insurance, business liability insurance covers a variety of claims such as property damage, bodily injuries, medical payments, among others. Here are several types of business liability insurance.
1. Commercial Umbrella Liability Insurance
This type of insurance is the same as personal umbrella insurance, although it has higher policy limits. It covers all the costs of extra liability that surpasses the limit of the underlying policy.
2. Contractors Liability Insurance
If your company is in the construction management industry, you should obtain contractors liability insurance. It protects professionals from construction losses or errors sustained when designing, constructing, and engineering a building.
It can also protect them from mistakes made by third-party vendors involved with the project.
3. Directors & Officers Liability Insurance
If your company has an advisory committee or board of directors, consider directors and officers liability insurance. It protects personal assets owned by directors and officers if they involve themselves in wrongful acts in your company’s management. Such acts include fraud, failure to follow the rules, misuse of company finances, misuse of resources, and stealing intellectual property.
4. Employment Liability Insurance
Small companies with workers benefit from this type of liability insurance. It protects you if a worker reports a claim against you for sexual harassment, wrongful termination, negligence evaluation, discrimination, and if you happen to breach an employment contract.
5. Errors & Omissions Liability Insurance
It is also known as professional liability insurance. It protects companies that provide professional services. It is mostly used by B2B businesses to protect them against reports that their services have caused financial distress to their customers.
How to choose liability insurance.
Choosing the right business liability insurance for your business can be a huge task. Here are some tips to help you choose the right one.
1. Calculate your assets. This should be the first process because you need to have an idea of what the insurance will cover.
2. Check your risks. Every business is exposed to certain risks. A business that rents private jets has risks different from a pet groomer. However, both can be sued by their clients if something wrong happens, and they will both lose.
3. Know your duties. Professional services are exposed to various risks, as well. You are responsible for being a professional when offering these services. This means that bad advice can lead to financial or legal trouble. It is crucial to know your duties and have efficient insurance coverage for them.
4. Compare costs. Money is usually the leading consideration. Buying the minimum coverage is tempting so that you will save a few dollars. Take your time to check extra coverage and comprehensive plans and choose what will meet your needs.