There are few responsibilities more challenging to navigate than owning a business. At some point, even companies supported by top-rated customer service teams will face difficult customers. Certain customer horror stories are passed around like gossip: these people fling accusations or are impossible to please. Suing is a common practice in today’s professional environment, which is why professional liability insurance is vital to your business.
Also referred to as Commercial General Business Insurance, this coverage insures all of your company assets. It covers problems that arise with people in and outside of the company for a host of problems ranging from product lost in a storm to medical payouts. For example, a retailer is covered if a customer trips on a wet spot and suffers injury hitting a shelf. It will also help cover property intentionally damaged by employees.
If someone sues your company, liability insurance will cover attorney fees, court fees, settlements, and awards. If you own rental property and a tenant burns the building down by falling asleep with a lit cigarette, insurance will cover the cost to rebuild the structure.
Business liability insurance also gives you continuing protection and does not necessarily end if your business is dissolved. Lawsuits are frequently filed after a business is no longer operating, which often prompts business owners to purchase run-off coverage.
Not all policies are created equal. Some businesses have different considerations. Business that serve food and drink, like restaurants, require very different coverage from a heavy transport business.
General policies dictate the insurer must pay any legal costs which arise from lawsuits. This ranges from bodily harm, property damage or loss, false advertising, and virtually anything else that threatens your business. General policies do not cover punitive damages. These policies typically come with a maximum coverage amount, often capping at seven figures.
Indemnity insurance policies protect service-oriented businesses from clients who sue for negligence, losing documents, copyright and confidentiality breaches, or loss of products or money, provided your business is liable. Indemnity policies are popular for accountants, engineering, and consultants.
Employment Practices Insurance
EPLI, or employment practices liability insurance, covers businesses when workers claim their rights have been violated. This is an umbrella insurance that covers all employee lawsuits. EPLI covers employers from discrimination cases, wrongful termination, failure to employ, career deprivation suits, and more.
Product liability covers policy holders in the event that a company’s products are misused or function improperly. For instance, if a surge protector catches fire, product liability coverage would pay out money on behalf of the manufacturer.
Licensed Professional Liability
Some liability insurance policies offer specific plans for certain professionals to meet their needs. For instance, physicians pay notoriously high malpractice insurance payments every month to cover anything that might go wrong during diagnosis and treatment.
Another big licensed professional insurance policy is Error and Omissions, which covers lawsuits from clients if you appear to have failed in your professional duties. E&O insurance covers all negligence claims, personal injury that arises from libel or slander, omissions, claims, and damages. E&O is often purchased for attorneys, doctors, architects, and accountants.
Coverage needs are based on the type of company you run. Every policy is crafted based on two major factors:
If you run a low-risk operation, a BOP (business owner’s policy) may be all you need. BOPs combine general commercial liability coverage and property insurance to achieve a lower, overall rate. Companies should continually reassess their policy needs. Companies that experience rapid growth will need larger, better policies. Insurance needs become substantially more complex when your business operates in multiple states.
Insurance providers review multiple fundamentals before providing you with an estimate. It is difficult to immediately determine insurance cost for any company, even simple BOPs. Deductible size and perceived risk are probably the two largest factors, but there are others, too:
The vast majority of small-business claims arise because a company failed to cover the basics. They are related to workplace injury from falls, minor accidents, and insufficient environmental support. Here are some leading factors that cause accident claims:
Consult your property and casualty agent to address your business’s risk. For proactive planning and advice, contact me. For insurance needs, an ounce of prevention really is worth a pound of cure.