3 Types of Liability Insurance for Business
If you have a business or are in the process of starting your own, chances are you’re knee-deep in questions about what you’re going to do about insurance. Have you gotten liability insurance for your business yet?
Have you considered what type of E & O insurance you’ll choose? How extensive is your coverage? These examples are just a few of the many questions that people could be asking you and, similarly, could be running through your head.
Although the thought of business insurance might be intimidating, we are here to make it that much more understandable for you. Today, we’re going to be talking about three types of liability insurance for business. By the end of this article, you’ll have a good idea of what the different types of liability insurance cover and what you should get to protect you, your business, and your employees. To learn all the basics about liability insurance, keep on reading.
1. General Liability Insurance
General liability (GL) insurance is the first type of insurance we’ll talk about today. Also known as business liability (BL) insurance and commercial general liability (CGL) insurance, GL insurance has the most basic coverage that all businesses should have. GL insurance can help pay for all general liability claims against your business. This could be bodily injury, damage to your client’s property, errors in advertising, or reputational harm or defamation to another business. Let’s provide some examples of these claims to make these terms more concrete. Here is an example of a bodily injury that GL insurance could help you cover: you own a horseback riding business, and one of your clients falls off a horse during a lesson and breaks their arm. In this instance, GL insurance can help you cover their medical costs.
To provide an example of a reputational harm claim, say you own a workout clothing brand, and to help market your products, you compare the strength and stretchiness of your brand’s material to that of another workout clothing brand. When this other business finds out you are harming their reputation, they might file a lawsuit against you for reputational harm, but GL insurance can help you with the legal fees for the lawsuit. GL insurance is a necessity for every business. If you don’t believe us, believe the numbers; a shocking 40% of businesses fail to reopen after a disaster, and this is largely in part because of a lack of insurance. Even if you think your business is not at risk for things like property damage claims or errors in advertising, you never know what could happen and what fees you could be faced with.
2. Professional Liability Insurance
The second type of liability insurance we’ll discuss today is professional liability (PL) insurance, also known as errors and omissions (E&O) insurance. E&O insurance is used when people make claims that your business provided less than what was expected or made errors in your service and choose to file a lawsuit against you. E&O insurance will help cover legal fees, including attorney fees, settlements, and all other administrative costs. This type of insurance is critical for business owners purely because of the fact that lawsuits can oftentimes take years, and with attorney fees costing over $200 per hour, a single lawsuit could run your business to the ground. By investing in top-tier E&O insurance, you can protect your business from a whole lot of damage.
3. Employer Liability Insurance
Thirdly and finally, we have employer liability (EL) insurance, which is more commonly known as worker’s comp. EL insurance contributes to claims made by employees, such as getting an injury on the job or missing work because of illness. In many states, EL insurance is required by law, but even if it’s not mandatory in your state, it’s still a great idea to get. Not only will you protect your business, but your employees will also rest assured knowing that if anything unfortunate happens on the job, they’ll always have worker’s comp to fall back on. By investing in EL insurance, you can keep your mind and the minds of your employees at ease.
In summary, here are the three types of liability insurance for business we mentioned today:
- General liability insurance
- Professional liability insurance
- Employer liability insurance
We hope this article answered your most pressing questions regarding the different types of liability insurance today. We recommend getting all of the mentioned insurances for your business to give you and your employees the most protection possible.