Insurance can be confusing and you probably have a lot of questions: What is liability insurance? What kind do I need to protect my business? What is the difference between a binder and a certificate of insurance? When do I speak to a broker?
Look, we will not try to convince you that insurance is not confusing, because we know it can be, and as a business owner, the last thing you want to do is spend hours on Google trying to figure out what type of insurance you need for your business. But the thing about insurance, while it can be confusing, is that it does not have to be.
At Zensurance, transparency is priority number one. We exercise this by eliminating the jargon where we can and explaining policies in plain English, but we know; as a business owner, you want to know you’re making the best decision for your business, and part of doing so is doing the research.
To kick off your insurance knowledge journey, we will answer your first question; what is liability insurance? And as a bonus, we will answer the second as well.
What is Liability Insurance?
Put simply; liability insurance protects the insured (aka you, the business owner) against claims where you or your business are held liable for damage to people or property. You may have also heard it referred to as third-party insurance, which means it covers the cost of legal fees and payout to third-parties.
And now, as promised, here are the five types of liability insurance you need to protect your business:
1. Commercial General Liability Insurance
When you think of liability insurance for your business, you are most likely thinking of commercial general liability insurance (CGL). If you’re going to choose to have only one form of protection, it should be CGL.
CGL offers business owners basic protection against common liability claims involving third-parties, such as property damage, or bodily injury. Should a lawsuit be brought against your business, CGL covers associated legal fees and compensation.
2. Professional Liability Insurance
If you offer advice or provide a service, you need professional liability insurance. Professional liability insurance protects business owners against claims alleging negligence or failure to deliver a service as promised. Depending on the type of business you run, you may need to supplement your coverage with additional types of professional liability insurance.
There is errors and omissions insurance, which covers claims alleging financial loss due to your services, and malpractice insurance, which covers allegations of bodily injury due to negligence on your behalf.
3. Cyber Liability Insurance
Over the past year, an estimated twenty-eight million Canadian business owners were affected by a data breach, meaning the time to invest in cyber liability insurance is now. Cyber insurance is a policy that covers financial costs associated with cybercrime, such as notification fees, legal expenses, and data restoration.
It costs an estimated $200,000 to recover from a cyberattack, which may mean financial ruin for a company without cyber insurance.
4. Product Liability Insurance
If you manufacture, supply, or sell a product, consider protecting your business from financial loss with product liability insurance. Product insurance protects your business from claims alleging property damage or bodily injury by your product. Product insurance may cover the costs associated with legal representation, product recall, design defects, and defective warnings.
Regardless of how many safety precautions you take, there is no guarantee that your product is error-free. Product insurance ensures that those errors don’t mean the end of your business.
5. Director & Officers (D&O) Liability Insurance
A must-have for any business or not-for-profit organization with a Board of Directors or advisory committee, a director and officers liability insurance (d&o) policy protects the personal assets of your directors and officers in the event they are sued for actual or alleged wrongful acts. These acts may include fraud, theft, or breach of duty, which results in financial loss, and ultimately, reputational damage.
We said it once, and we will repeat it; insurance does not have to be confusing, and we believe it should not be confusing. We know your business is unique, and a unique business means a unique set of risks. Depending on the type of business you run, you may not require all five policies listed above, or you may need more.
To see what liability insurance looks like for your business, start an online application. Once you submit, you can speak with your broker (question number four!) who will help you customize your insurance policy to meet your specific business needs.
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At Zensurance we simplify the process of getting commercial insurance so that you get the coverage you need, quick and easy!
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