Protect Your Company from Lawsuits with Business Liability Insurance

You've always put your customers first. But one day a customer slips and falls in your store, or one of your employees makes a clerical error with a client of your accounting firm. The next thing you know your customer is filing a lawsuit against your business. If you don't have business liability insurance, you could end up losing your shirt, and your business.

It's estimated that a new lawsuit is filed every 30 seconds in the United States, and the numbers seem to be going up every year. Even if the lawsuit is thrown out by a judge, it could still cost you a significant amount of money in legal fees. With business liability insurance, your business is safe from unexpected financial strains, covering the expense for a legal defense and damages.

While "umbrella" policies provide general liability coverage, it's important to know the specific types of liability coverage available. If you do not currently have liability insurance, our guide can help you understand, choose and buy the right type of business liability insurance policy to fit your business needs.

General Liability Insurance

General liability insurance protects you from business lawsuits resulting from any bodily injury that takes place on your business' premises. This would include the customer that fell in your store, if a vendor like a delivery person, an employee or a visitor is hurt on your property.

If an employee was negligent by leaving a ladder leaning against the wall and it fell and hurt someone, or if an employee was on your customer's premises and caused property damage, these instances would also be covered.

In some cases, and depending on the general liability insurance you purchase, libel, slander, and/or infringement on intellectual property may be covered. So work with your insurance agent to determine what you may or may not need in this instance.

Professional Liability Insurance

Professional liability insurance is also called errors and omissions insurance and is critical for accounting firms, law firms, financial advisors, building contractors, and other businesses within the services industry. It's also referred to as malpractice coverage for health care professionals.

It also helps to look at associations within your industry to see what level of liability insurance was needed in lawsuit cases involving claims against your type of business. This will enable you to purchase specific enhancements to a basic professional liability insurance policy that is tailored to your type and size of business.

Product Liability Insurance

You may have heard about the issues involving lead paint in toy products last year. Even if a product is found to be defective and recalled by a responsible company, a lawsuit will most likely follow.

Product liability insurance coverage protects a company against lawsuits where products are found to be responsible for an injury, accident or death. Again, the type and level of product liability insurance you would need to purchase is dependent on the type of products your company manufactures and sells. Your premium will also be dependent on the level of safety precautions taken by your manufacturing process and how well you meet industry standards and/or certifications.

Employment Practices Liability Insurance (EPLI)

The increasing number of business lawsuits, wrongful termination, sexual harassment and sexual discrimination lawsuits have definitely contributed to the rising statistics.

Employment practices liability insurance will protect your company against these types of lawsuits brought about by a current or former employee, or a business associate.

Occurrence Policy vs. Claims-made Policy

When you shop for business liability insurance rates online or when working with your insurance agent, you will be given a choice of an occurrence policy or a claims-made policy. So what is the difference between the two?

Besides the potential difference in price, the less expensive of the two is the claims-made policy, which provides protection from claims made during the life of the policy. The occurrence policy covers claims made after-the-fact, which can be months or years after the incident took place.

A 2005 study by the Small Business Association states quite frankly, “The impact of litigation on businesses goes well beyond the purely financial impact of legal fees and damages. Most small business owners are invested personally in their businesses; litigation causes not just financial loss, but also substantial emotional hardship, and often changes the tone of the business.”

The study goes on to say that small business owners were forced to use assets to pay for litigation, which nearly put them out of business. In today's economy where business operation costs are rising steadily, are you willing to take that kind of a risk?

If the answer is “no,” finding the best deal on business liability insurance rates can be done easily and quickly online.

Learn more about business liability insurance from NetQuote – get your free business insurance quotes today.

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