Liability insurance is an important business protection policy that provides financial
coverage for the legal costs of defending a lawsuit. It also helps cover medical
expenses resulting from bodily injury and property damage arising from the
Depending on your risk profile and the type of business you run, liability premiums
can vary greatly. This is why it is important to review your policy carefully and get
an accurate quote.
1. General Liability
General Liability Insurance is one of the most common forms of business insurance,
and it’s an important part of any small-business owner’s portfolio. This policy
protects your company from claims of property damage, medical expenses, and
legal fees if a customer, vendor, or other third party is injured on your premises.
The minimum level of coverage you need varies by industry, customer demand, and
comfort level. For example, businesses that sell or rent out buildings or occupy land
often carry high liability limits in the range of $500,000, $1 million, or $2 million.
A deductible is the fixed out-of-pocket expense you agree to pay before your
coverage starts pay. The deductible can be as low as $250 on a $1 million limit CGL
General liability also covers other risks that aren’t typically covered by other types
of business insurance, including advertising injury and libel, and slander. If a
business’s advertising or marketing practices infringe on copyright or trademark, for
example, they could be sued for libel or slander.
2. Professional Liability
If you provide professional services, such as financial advice, accounting,
consulting, or legal services, you need professional liability insurance. This policy
protects you from claims of negligence, malpractice, errors, or omissions in your
This coverage can help you pay the costs of defending a claim and paying
judgments against you up to your policy limits. It also covers legal fees and
damages for non-financial losses, such as licensing board penalties.
The most common types of professional liability insurance include occurrence and
claims-made policies. Occurrence policies provide coverage for claims filed during
the period of the policy, while claims-made policies offer coverage for claims filed
after the end of the policy.
AdvisorSmith reviewed the ratings of several insurers to identify those that have the
best financial strength, customer satisfaction, and ease of use. Those factors are
the most important to consider when choosing an insurer for your professional
3. Employers’ Liability
If you work in a high-risk industry like construction, insurance, or food service, it’s
important to have liability insurance. This type of coverage helps to protect your
business from the costs and claims of employee lawsuits, including workplace
injuries, illnesses, and deaths.
This type of coverage is typically packaged with workers’ compensation to cover the
financial expenses that are associated with workplace injuries and illness. It also
covers the legal costs that an employer incurs in defending against employee
lawsuits, such as discrimination and sexual harassment.
Employers’ liability insurance is not mandatory in all states, but it is a good idea to
purchase this coverage for your company. It may be required by law, and it can help
protect your business from costly litigation.
Many businesses opt to purchase employers’ liability insurance as a stop-gap
measure to bridge the gap between workers’ compensation and general liability
coverage. This coverage is especially critical in states that require businesses to
purchase workers’ compensation through state funds, which do not allow them to
buy it from private insurance companies.
4. Automobile Liability
Liability insurance is one of the most important coverages to have, as it helps
protect you if you cause an accident. It covers the cost of repairing or replacing
someone else’s property or injuries.
Each state sets a minimum amount of liability coverage, but it’s usually smart to buy
more than the required minimum. Higher limits help you avoid paying out-of-pocket
if you hit a car or cause other damage.
Besides liability, drivers should consider getting personal injury protection (PIP) and
medical payments coverage. These types of policies can cover medical expenses
for you and your passengers, regardless of who’s at fault in an accident.
Some states also require uninsured motorist coverage, which pays for your
expenses if you get into an accident with a driver who doesn’t have enough
insurance to pay for the damages. These policies can be costly, so you’ll want to
compare quotes carefully.
5. Products Liability
Product liability insurance is a vital part of any business that sells products or
services to the public. Regardless of the product, there is always the chance that it
will malfunction and cause bodily injury or property damage to consumers.
A faulty design, an error in manufacturing or importing, and a failure to provide
instructions for use are all potential risks that can lead to product liability claims.
Even the most meticulous manufacturers can face a lawsuit if a defect is discovered
in their product.
This can result in lost profits, damaged reputations, and millions in awards and
legal fees. And many clients, landlords, retailers, and marketplaces will not work
with a company that does not carry adequate product liability insurance.
Fortunately, most businesses have product liability coverage through their
commercial general liability policies. However, it is advisable to shop around for the
best policy. You can do this by comparing several quotes from different insurance
companies. In addition, be sure to check the financial strength of the insurers you
6. Crime Liability
Crime liability insurance protects your business from loss resulting from theft,
embezzlement, forgery, and other crimes. It’s often included in package policies,
but can also be purchased stand-alone.
If you aren’t sure whether you need a crime policy, ask your insurance advisor for a
risk assessment to determine which types of coverage you need. It’s important to
note that most commercial crime policies are written on a named perils basis, so
only those incidents and costs specifically listed in your policy will qualify for
You may also want to consider adding employee dishonesty and social engineering
fraud coverage, which covers losses resulting from the fraudulent inducement of
employees, such as by phishing scams and impersonation schemes.
Chubb is one of the top providers of commercial crime policies and offers excellent
coverage options for small businesses. However, its extensive list of services and
policy benefits means that it tends to be more expensive than competitors.
7. Business Owners’ Policy (BOP)
A Business Owners’ Policy (BOP) is a package of insurance policies that cover most
of the risks a small business faces. It provides business property and liability
coverage, along with business interruption insurance.
It can also include crime, vehicle coverage, and flood insurance. It is generally
more affordable than buying a set of individual insurance policies.
Businesses that do not qualify for a BOP may need to purchase a variety of
individual policies, depending on their risk profile and specific needs. For example,
a large restaurant with a complicated insurance portfolio would most likely benefit
from purchasing several individual policies that would tailor their coverage to match
their specific risks.
A BOP is designed for small businesses and usually does not make sense for larger
companies that have more complex insurance needs. The best way to determine
whether or not your business is eligible for a BOP is to gather basic information
about it and get a quote from an insurer. It can take just a few minutes to assemble
a quote that will help you identify the insurance package that is right for you.
8. Umbrella Liability
Umbrella insurance provides liability coverage over and above the limits of your
home, auto, or boat insurance policies. It may cover a variety of liability claims,
including bodily injury and property damage.
It can also cover lawsuits from libel, slander, or defamation of character. It can help
you avoid paying huge financial judgments that could bankrupt you if a claim is filed
Some people are more susceptible to liability than others, so it’s worth considering
whether or not an umbrella policy is right for you. This is particularly true if you own
or rent out the property, engage in a particular lifestyle, have household staff, or are
a public figure.
Adding umbrella insurance to your existing policies will raise your rates, but it can
be well worth the extra expense for peace of mind. It’s worth shopping around to
find a reputable insurer that offers this coverage at a competitive rate.
Liability insurance is a type of insurance policy that protects against claims of injury
or property damage. These policies generally cover medical expenses, legal costs,
General liability is one of the most important types of business insurance in the US.
It provides coverage for lawsuits resulting from accidents and workplace incidents,
including car crashes and slips and falls. It can also cover infringement on
intellectual property, slander, libel, and other claims. In addition, it may provide
cover for product liability.