One of your primary responsibilities as a business owner is protecting your business. That means having security and safety measures and policies in place, for example. You also need to protect your employees from harm. Having the right insurance for business is a big part of that protection.
While insurance for business won’t prevent adverse incidents from occurring, it will provide you with the safety you will need if they do. In some cases, certain types of insurance are required by law, depending on the state in which you operate.
All states but one require employers to carry workers’ compensation. This protects workers and employers from the financial fallout of an injury or illness related to work. You must also have commercial automobile insurance if you have a fleet of vehicles, just like you would for your personal vehicle. The federal government mandates that most employers have to invest in disability and unemployment insurance as well.
Do You Need General Liability Insurance?
What about general liability insurance? Liability insurance is not required by law in the United States. However, every business should carry it, especially if they do not have the financial resources to withstand a lawsuit. Businesses that are most likely to find themselves on the receiving end of a legal claim are storefront businesses, those that advertise, use social media, and store sensitive customer data. Since just about every business does at least one of those things, then there is an excellent chance that you should have general liability insurance for your company, even though it is not required by law.
What is General Liability Coverage
General liability insurance protects policyholders from the damages of a claim made against them for property damage, injury, loss of reputation, or exposure to harm. For example, if a customer comes to a business and trips on something, the company can be covered for paying medical bills and other costs to the customer. However, there is also a chance your business could damage someone’s property, such as on a job site, or if that trip and fall damaged something the customer was carrying on their person.
General liability will also protect against claims for reputational damage. For example, this could happen if something you publish as advertising makes a claim about a competitor that is untrue and damages their reputation. You can also get coverage for data breaches. For example, if you store data accessed by a third party, either through malicious actions or your own mistakes, you could be held liable by anyone affected by the breach and suffers losses.
Costs Covered by General Liability Insurance
General liability will protect you against the costs you could incur if a legal claim is brought against your business. For one, you will have to pay lawyers and legal fees, even if you did nothing wrong. You then may have to pay out for settlements or damages that are awarded to the party that made a claim. Lawsuits can drag on for years and cost hundreds of thousands of dollars in some cases. If you do not have protection, you will have to pay for those costs out of your pocket.
You may also be required to pay for medical bills, funeral bills, lost wages, and rehabilitation costs. These can also be extremely high, depending on the nature of the injuries or the damage. In addition, if you are sued due to a data breach, you will most likely face serious public relations problems. Many general liability policies will help to pay for PR professionals to help repair your image with the public after such a damaging situation.
What Is Not Covered?
It’s essential to understand what is and isn’t covered so that you don’t find yourself in a situation where you thought you were protected when in fact, you were not. For instance, general liability does not cover injuries to employees. If an employee is injured or gets sick due to their job, then your workers’ compensation coverage will provide protection. If you do not have workers’ compensation, you are most likely breaking the law, unless you live in Texas.
General liability will also not cover you for vehicular accidents. If one of your vehicles damages someone else’s property, your commercial vehicle insurance covers that type of property damage. Make sure that you have the right coverage. If you use a personal vehicle for business tasks, you may not be covered.
If you provide a service, a client may bring a claim against you if you cause them a loss. This can happen with medical malpractice, for example. Likewise, if you provide financial advice based on an error that leads to economic loss, it can also occur. This is a different kind of liability covered by professional liability, otherwise called errors & omissions insurance.
Damage to your own property is covered by commercial property insurance. This does not involve another party suing you but does involve you potentially having to pay for repairs or reconstruction after theft, vandalism, fire, water damage, or a natural disaster.
Who Needs General Liability Insurance?
There are very few businesses that do not require liability insurance if there are any at all. To be a successful business, you have to interact with the public somehow. If you have customers coming to your store, they can get hurt. If you produce advertising, something you publish could leave you legally vulnerable. If you do work on other properties, then there is a chance that you could cause damage or injury there. To be safe, every business should have general liability insurance to protect themselves.
There are many ways that your business could get sued, even if you have done nothing wrong. That’s the unfortunate truth of a litigious society. Therefore, you need to ensure that your business is protected as a business owner because even a single claim could lead to bankruptcy and financial ruin. It’s true that general liability insurance for business is not required by law. However, as a responsible owner, you need to have it in place to make sure that you are fully covered.