Every business will face some form of risk and comes with liabilities. As an LLC it may be difficult to understand the different types of insurances and what might be required for the business. It might not need to purchase all types of insurance policies, but depending on the line of work and operations there might be several to consider.

A business that has liability insurance gives customers the impression that it can be trusted and is well established. It also shows potential customers that the companies values its assets and are operating in the best interest of their customers in mind. Furthermore, many businesses require proof of liability insurance before dealing with other lines of work.

Below is an outline of the 5 types of liability insurance cover a small business should consider and what they cover.

General Liability Insurance

General Liability Insurance (GLI) also referred to Commercial General Liability Insurance (CGL) is one of the most cost-effective solutions for small firms. It is comprehensive in its cover and will cover a line of work in the event of unforeseen events. Being sued can incur thousands of dollars in legal fees and paid compensation. It is therefore highly recommended that it obtains at least GLI. GLI will cover the business in the case of the following scenarios:

  • Physical bodily injury to a non-employee.
  • Property damage either owned by the firm or owned by a customer.
  • Medical costs when a non-employee is injured from the business operations.
  • Liabilities due to advertising. A suit can be brought against a firm when another business incurs losses due to advertising or copyright infringements.
  • Personal liabilities for example slander. Wrongful arrest, illegally occupying a property, or invasion of privacy are also examples of personal liabilities.
  • Legal Fees will be covered in the event that a lawsuit is filed against the business.

The insurance policy usually covers the legal fees as well as the cost of the losses incurred should the business be found liable. It must be noted that the business will be covered for the amount up to the policy limit.

Professional liability

Certain types of businesses such as legal firms, accountants or web designers may need Professional Liability Insurance. This type of insurance comes into play when the client or customer has incurred losses due to the failure to perform by it or incorrect advice given. These can then be sued for malpractice. Professional Liability Insurance usually covers:

  • Negligence
  • Malpractice
  • Unfair dealings or violation of good faith

Other types of businesses that may require this type of insurance are:

  • Insurance agents, consultants or brokers
  • Fitness professionals
  • Beauty technicians
  • Photographers

Most firms that offer a professional service will require Professional Liability Insurance. A malpractice suit can cost an enormous amount of money and a business should be prepared. It is important to remember that each firm will have its own unique set of requirements and the insurance can be tailored to suit the businesses professional needs.

Employer liability

Any line of work that elects to hire employees should consider having Employer Liability Insurance. When an employee is hurt while performing work for the business, worker compensation insurance will cover the medical fees for the employee. It may also cover a portion of the wages for the loss of income the employee incurred. However, an employee may also feel that the worker’s compensation payments are not enough and sue the business for additional damages that might not have been covered by the worker’s compensation insurance. In this case, the business is protected and the Employer Liability Insurance will cover the payment should the business be found liable.

Employers can also be sued for wrongful termination of an employee, discrimination, or sexual harassment. Whether the business is liable or not, a suit can cost thousands of dollars, and business without Employer Liability Insurance will then have to cough up the cash to cover the costs. In many cases, a settlement will be negotiated by the two parties which will also then be covered by the insurance.

Commercial auto insurance

A business that owns a vehicle is often required by law to have commercial auto insurance. In the event of a motor vehicle accident, the business will be covered for any damages to its own and a third party vehicle. A business can also get insurance for employees who use their own vehicles for business purposes. Below are some providers of Commercial Auto insurance in the USA.

  • Progressive

The Progressive Group of Insurance Companies write more than 13 million vehicle policies per year and claim to be the 3rd largest vehicle insurer in the USA.

  • Travelers

The Commercial Auto policy offered by Travellers covers physical damage, liability, and motorists who don’t have insurance or are underinsured.

  • Liberty Mutual

The company claims to be the 5th largest property and casual insurer globally. It’s auto insurance policy comes with various risk control tools.

  • Nationwide Corp

Based in Ohio, Nationwide Corp provides commercial as well as personal insurance.

  • Zurich Insurance

The company offers the conventional type of auto insurance, but also offers a policy that includes deductible programs.

The companies listed are only a few of the many other insurance providers available. Depending on the business operations, a vehicle or vehicles may be crucial to the survival of the business. Auto Insurance will cover the cost for repairs or the cost of a replacement vehicle which ensures the business can continue its operations as normal. It is extremely important.

Product Liability Insurance

For any business that manufacturers or hires out a product Product Liability Insurance might be required. It is not only manufacturers that can benefit from this type of insurance, but also retailers, wholesalers, or transportation companies. Product Liability Insurance covers the business in the event of damage or injury to a person or property as a result of the business’s product.

There are many other types of insurance available for small businesses, but the 5 listed above are some of the main liability insurance types a business might require. Every business is different and has different needs so it is important to assess the operational risk of the business before deciding what type of liability insurance is required. The business might require all of the above-mentioned liability insurance coverage or only a select few. Click to read more.