Claim: A client claims a skincare product they bought from your spa caused a severe skin reaction.
Outcome: Your client successfully sues you for bodily injury due to a product you sold to them. Your product liability insurance covers the total medical expenses and court costs, totalling $11,000.
Claim: Your employee accidentally drops a piece of furniture during a home delivery and damages your client’s hardwood floors.
Outcome: Your client successfully sues you for property damage, and your commercial general liability insurance covers legal expenses and costs to repair the floors, totalling $45,000.
Claim: A client who you developed an e-commerce site for claims your work did not meet the agreed-upon requirements and caused their company to suffer a financial loss. Outcome: Your client sues your failure to deliver a service, as promised. Your professional liability insurance covers the legal expenses and monetary judgment, totalling $18,000.
Liability Insurance, Explained.
What is liability insurance?
Liability insurance protects your business against lawsuits associated with third-party property damage or bodily injury. Depending on your needs, a business liability insurance policy can include the following coverages:
Commercial general liability insurance protects you from the most common risks you may encounter in your day-to-day business operations, such as third-party property damage and bodily injury.
Professional liability insurance is a type of liability insurance that provides coverage for claims alleging negligence or failure to deliver a service as promised, resulting in financial loss.
Errors and omissions insurance is a type of professional liability insurance that protects you from claims alleging a financial loss due to an error or omission on your part.
Cyber liability insurance covers the costs associated with recovering from a cybercrime involving your technology systems and customer data.
How much does liability insurance cost?
The cost of liability insurance depends on the amount of coverage required for your business. For a small business, a basic General Liability Insurance policy starts at $450 per year with a $2 million coverage limit.
The following factors are taken into consideration when determining the cost of your premium:
Business size and location;
Years of experience;
Annual and projected gross revenue;
Number of employees; and,
Insurance claims history.
In the online quote application, we ask some questions about your business to gain a better understanding of your coverage needs.
What does liability insurance cover?
The risks you are exposed to as a business owner will vary based on the size of your operation, industry, or profession. In general, business liability insurance provides coverage for another’s bodily injury, property damage, or financial loss (professional liability) due to your business operations. Regardless of fault, your liability insurance may cover the costs of legal defence, out-of-court settlements, and third-party medical expenses.
How much liability insurance coverage do I need?
You should purchase as much coverage as you can afford. When determining how much liability insurance coverage to buy, consider the size of your business, your industry, and how frequently you interact with third-parties, including customers, vendors, and other companies.
These factors can help you identify your level of risk exposure, and depending on your profession; you may require additional coverage. For example, a contractor is more likely to be at risk for causing third-party property damage than a web designer who works from home.
Speak with your broker about customizing your policy to meet your specific business needs.
Do I need liability insurance?
Liability insurance is not a mandatory requirement for you to run your business. Still, it can protect you from many of the common risks you encounter in your day-to-day operations and cover costs should you be exposed to a lawsuit. When deciding whether or not to purchase liability coverage, consider your profession. For example, contractors are frequently required to show a certificate of insurance (COI) before they can secure a contract.
What is not covered by liability insurance?
When it comes to insuring your business, it is important to understand where you’re covered and where you’re not. Liability insurance provides coverage for incidents involving third parties, excluding you and your employees.
Liability insurance is not mandatory to operate your business, but as a business owner, you may be at a higher exposure to risk than the average person. A liability incident could take seconds to occur, and months for you to recover. Should it happen to you, it’s best to be prepared to cover costly legal expenses that may potentially threaten the survival of your business.
We’ve made purchasing liability insurance for your business a quick and easy process. With our simple-to-use online platform, you can get a free, customized business quote in under thirty minutes. Have questions about what coverage or policy is best for you? Please speak to one of our dedicated brokers about customizing your insurance policy to meet your unique business needs.
Do independent contractors need liability insurance?Zensurance
As an independent or freelance contractor, you are exposed to many of the same risks as a larger company. Liability insurance provides coverage for costs associated with lawsuits or claims brought against you or your business. When determining what type of liability insurance, you need to protect your business, consider your profession. For example, an independent accountant and snow removal contractor both require insurance, but the type and amount of coverage they need vary based on the risks specific to their profession.
What is third-party liability insurance?Zensurance
When it comes to liability insurance, it is important to understand who is covered if a liability lawsuit or claim brought against you or your business. Third-party liability insurance is coverage that protects you against costs associated with lawsuits or claims alleging bodily injury or property damage to another person, client, vendor, or business (the third party). You and your business are considered first-party, and a liability insurance policy will not cover injuries or property damage to yourself or your employees.
What is the difference between professional liability and commercial general liability insurance?Zensurance
The primary difference between professional liability and commercial general liability (CGL) insurance is the type of risks they cover. CGL covers the cost of legal and medical expenses associated with claims alleging third-party property damage or bodily injury as a result of your business operations. Professional liability insurance also referred to as errors and omissions, provides coverage for claims alleging negligence or failure to deliver a professional service as promised, which may have led to a financial loss on your client’s behalf.
I work remotely, do I need liability insurance?Zensurance
Yes, even if you work remotely or don’t have a physical office space, you still need liability insurance to protect you and your business from costs associated with claims or lawsuits. Liability insurance provides coverage for more than slip-and-falls and property damage; if a client is unhappy with the outcome of your service or a product you sold causes an adverse reaction, you may find yourself on the wrong side of a lawsuit.
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