There are a million different types of insurance, but liability insurance is an important one for you to know about. Liability insurance ensures that you are protected in the event that your business becomes involved in a lawsuit. Read on to learn more about liability insurance and how it protects your business.
What is Liability Insurance?
Liability insurance is any type of insurance policy that protects an individual or company in the event of a formal lawsuit or other third-party claim. It protects the individual’s or company’s assets and pays for any obligations (ex. medical costs) incurred. Liability insurance will also cover any legal costs, including settlements. Your policy will outline the maximum amount the insurance company will pay against a liability claim.
So, for example: if your business’ liability insurance policy has a limit of $150,000, and your company gets sued for $150,000 in medical costs and $50,000 in legal fees, you will be responsible only for the difference of $50,000.
Why do I need Liability Insurance?
We live in a very litigious society. While many may think they won’t ever face a lawsuit or claim in their life, you can never be certain. Think about it this way — your annual liability insurance premium will definitely be less than the thousands, or even millions, you could potentially spend fighting your case in court.
Types of Liability Insurance
Depending on your type of business and how much perceived risk is associated with it, you will need different liability insurance policies. Here are a couple of the main types of liability insurance:
General liability insurance covers four types of claims:
- Bodily injury
- Property damage
- Personal and advertising injury
- Medical expenses
A general liability policy will also cover any legal fees as well as the settlement amount, if applicable.
Umbrella liability coverage provides added protection above the limits of your current general liability insurance policy. Its designed to protect individuals and companies during larger than expected losses and generally kicks in when your other insurance limits have been reached.
Errors & Omissions Liability
Errors & omissions liability insurance, also known as professional liability insurance, is a necessity for anyone who provides a professional service. This type of liability insurance includes coverage for financial losses caused by:
- Breach of contract
- Inaccurate advice or information
- Typographical errors
- Incorrect appraisals
This type of insurance is mandatory for all companies to have, and protects against liabilities arising from injuries or death of an employee.
Mistakes happen. Having the right liability insurance ensures that your company and employees stay protected. If you’d like to talk to a broker about the different types of insurance liability and which ones are right for you, give Capital Insurance Brokers a call.