Liability Insurance

Protect your business and yourself

By Drive

Some small businesses wait until something happens before they decide that they need liability insurance. While financial penalties are a nice motivator to get you to look at liability insurance coverage, as with most things in business, proper planning can help you come out ahead of the game. A worthwhile insurance broker will create an insurance package that caters to your company’s current needs, but also with an eye toward the future.

Business Owners Policy

Often called a “BOP,” this is a package that combines both protection for property (such as furnishings, fixtures, valuable papers and equipment in case of fire, theft or damage), and general liability insurance coverage (which protects business assets against any alleged property or bodily damage to someone else). The advantage of having a BOP is that it can be tailored to fit the areas in which a business is most susceptible to losses, by having higher coverage limits in those areas. It protects the employer against such losses, as well as the employees from being directly liable. Small business liability coverage is a must in this day and age.

Commercial Auto

If a company uses transportation to conduct its business, it should consider commercial auto coverage. Damage done by a vehicle while doing business for the company may not be covered by a personal auto policy. If you have failed to tell your personal auto insurance company that you are using your personal car for business purposes, they might threaten you with misrepresentation, so it is better to be up front and find out what is needed. It protects the employer’s business assets as well as any employees who drive to do company business.

Professional Liability

Customers can claim that something you did, advised them to do, failed to do correctly, made, or failed to make correctly in your professional capacity caused them harm in some way. Professional liability insurance can cover the legal costs involved with claims against a company on such matters. It’s a good protection policy for professionals such as lawyers, software developers, teachers, consultants and Web designers.

Rates will vary depending on the risk. For instance, if you are a computer consultant and have access to a large company’s network, the risk is higher. Professional liability insurance protects a business owner against harm potentially done by someone he or she has hired to consult or perform services.

Product Liability

While included in most general liability policies, product liability is a term you should be familiar with. It covers your company against your product causing damage after it has left your facility and is either in stores or has been purchased. If you ship products to buyers or sellers, make sure this is part of your product liability insurance. Depending on the nature of the product and the potential for damages, coverage limits can be raised or lowered accordingly. This protects the employer and any employees at the company involved in the product creation process.

Worker’s Compensation

Some states handle this coverage themselves and will not allow insurance companies to sell such insurance. If your state allows for companies to sell insurance for workers compensation, it covers your workers against on-the-job injury and medical issues that are work-related. This also protects the employer against employees suing the company.

Umbrella Coverage

This coverage can go over top of all other coverage plans, raising the coverage limit in case of a large lawsuit or claim.

Specialized Insurance

Some companies offer insurance specifically catered to certain businesses such as technology, law and consulting. Checking with them about these kinds of insurance may save a company some money as well as cover them more thoroughly.