Entrepreneurs open small businesses with an eye towards reaping the rewards that come with hard work and a bit of luck. One thing they’re also aware of is the risks that come with it. Liability claims or lawsuits, for example, can hit a small business so hard it could end up shutting down.
The only way a small business can protect itself from this type of risk is to purchase liability insurance. If you’re an entrepreneur and you’re not covered just yet, here are the types of liability insurance that your business needs.
General Liability Insurance
Also known as business liability insurance, general liability insurance can protect you from claims or lawsuits that range from bodily injury to property damage.
A customer, for example, can file a personal injury claim against you if he or she suffered an injury of some kind while inside your place of business. That customer can say that the slippery floor within your business’ premises caused her to lose her footing and fall, breaking her hip in the process.
Considering how costly medical treatment for this kind of injury can get, your customer will likely file a claim against you. It could even progress into a full-blown lawsuit, which could be so much costlier than medical treatment.
Without general liability insurance, you will be forced to shoulder all medical and legal costs out-of-pocket, which could put your small business in a financial hole, from which it will be very tough to climb out.
You’d be facing the same kind of trouble if someone sues you for property damage or reputational harm. Fortunately, general liability insurance covers you in such situations, and more.
In most states, worker’s compensation insurance is mandatory for all employers. A type of employer liability insurance, workers’ compensation provides coverage for your employees whenever they sustain work-related injuries or illnesses.
Workers’ compensation insurance will also pay for medical treatment expenses and the missed wages of injured or sick employees. Disability benefits will kick in as well should the employee suffer temporary or permanent disability.
Employees who lose their lives after a work-related accident will also be eligible for death benefits, including payment for funeral expenses.
Professional Liability Insurance
If your small business is all about providing professional services, then obtaining professional liability insurance is a must.
Lawyers, accountants, doctors, real estate brokers, engineers, and architects running private practices are always at risk of being at the receiving end of lawsuits claiming they suffered financial losses because of errors they committed or their negligence while providing their professional services.
If you have professional liability insurance, also known as errors and omissions insurance, your legal expenses will be covered, from litigation costs to court-ordered compensation for the claimants.
Getting the right liability insurance may entail additional expenses on your part. Still, with the kind of protection you’ll be getting from it considering all the ever-present risks to your business, it will be well worth it.