Business Insurance

Do All Businesses Need Liability Insurance?

All businesses work with clients and customers directly. Some offer products while others offer professional services. In both cases, your consumers and employees expect that they remain safe from bodily injury, personal injury, and property damage at all times while they interact with you.

The moment a client walks onto your premises and sustains an physical injury or a financial loss before, during, or after a transaction, you will be held responsible for any legal feels or claims awarded. You may foresee how accidents or other liability claims may arise, but you cannot prevent them entirely. Sometimes, the most absurd of circumstances is what causes a claim to be filed against your business.

McDonald’s once had a liability lawsuit filed against them for serving hot coffee which later scalded a customer. Because customers do not sign liability waivers upon entering, even a product that is designed to be hot is by default a liability risk.

Liability claims can generate considerable financial damages for the defendant. General Motors was sued for using coolants in their vehicles that produced dangerous chemicals. This lawsuit was awarded in favor of the plaintiffs, which resulted in GM paying $25 billion to its 25 million customers, excluding legal expenses.

Very few small businesses can survive after paying for a single liability claim, plus legal defense fees. Therefore, every business needs liability coverage to shield themselves against such enormous expenses. Let’s take some time to go over the details concerning liability policies.

Liability is defined as the state of being legally responsible for something. Liability insurance is broken down into two separate policies:

General Liability Insurance –  A general liability insurance policy  is designed to protect the insured party against lawsuits from clients and third parties. A claim can be made because of:

  1. Bodily harm sustained by non-employees in your business premises that lead to medical expenses
  2. Property damage created by your actions, whether intentional or unintentional.
  3. Advertising injury on your part such as copyright infringement, slander, or libel.
  4. Court costs for liability lawsuits (criminal defense is considered an exclusion).

Professional liability insurance – If you provide counsel or services, as personal trainers do for example, you are likely to come across clients who will not be satisfied with your services or experience an inverse effect from either your counsel or services. Additionally, in the line of duty, you may ignore or omit certain things that may cause a client to incur financial loses. These types of risks are covered by a professional liability insurance policy (which is also known as an errors & omissions insurance policy).

Take this situation for example: A doctor who misdiagnoses a patient is liable for a lawsuit from the patient. The mistake can be due to negligence, or a failure to identify the symptoms correctly. Professional liability coverage is designed to cover the cost of defense from such claims, hence protecting the insured from the financial burden.

To recap, let’s break everything down into seven advantages that you’ll get once you opt into liability insurance coverage.

  • If an accident occurs that nobody could predict would ever occur, a general liability policy can protect your business from the financial consequences.
  • Human error is neither an excuse nor a legitimate defense for professionals. A professional liability policy covers negligence as well as claims made by those who trusted your counsel, only for them to lose more than they gained.
  • The defense costs and payouts for claims awarded is an expensive burden to any business. Whether you win or lose in civil court, these costs will be covered by the insurance company you work with.
  • Liability insurance transfers the associated risks related to your business over to your insurer. You then have peace of mind and can concentrate on the important aspects of your day-to-day business.
  • Some competitors are ruthless and will exploit your weaknesses to their advantage. Consumers are also out looking for opportunities to make the most out of an unfortunate situation. These two types of business insurance increase your professional image in the eyes of your competitors and your customer base.
  • Some industries require that all professionals within them must have liability insurance i.e. the construction industry. To be legally compliant, you must take up at least one of these policies.
  • To win bids on projects, you must prove your financial capability including insurance for the project. Thus, having a liability insurance plan in place can actually gain you more clients than you would otherwise.

Some consumers may argue that they work remotely and do not serve the general public. However, freelancers have been sued for liability in the past. A web developer who does not complete a client’s website as per the contract agreement is liable for liability lawsuit. Graphic designers using the same content for different clients infringes on their original client’s copyright, which can also cause a liability lawsuit. All forms of businesses, therefore, do need liability insurance.

If you are a business owner lacking liability insurance, the time to acquire a comprehensive policy is now. The longer you wait, you expose your business to considerable risk. Contractor’s Liability has a team experts on hand that can assist you with matters concerning liability insurance. Whether you are a handyman, plumber, hotel owner, or a coach, we understand exactly what coverage your business needs.

Contact us today for fast and affordable liability insurance coverage for your business!

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