Liability insurance is a commercial insurance product that protects businesses and other enterprises from accidents and injuries that occur on their premises. Accidents in a business can cause various types of injuries that create financial, physical, or psychological problems for customers. Business owners are ultimately at risk of law suits and claims from any individuals who deal with the business in any capacity. These issues can range from business contracts that are unfulfilled to medical injuries that require money for treatment.
Business liability insurance practically helps businesses to survive difficult scenarios in this way. It provides for the expenses involved in the legal defense and damages that the business owner may be required to cover. The maximum amount that can be paid out by the insurance company is the policy limit of the liability insurance policy. Owners of the business would then be responsible for any claims beyond these limits if there were any remaining. In general, business liability coverage limitations are sufficient to cover expenses in the claims and lawsuits.
There are a variety of different scenarios where this type of insurance proves to be useful for a business. Operations and premises are a first potential area of business liability. This covers accidents such as slips and falls in a business. It would pay for hospital bills that the customer incurred because of the accident. It could also be used to pay for legal bills that resulted from a negligence lawsuit.
Completed operations and products are another area of concern. A job that the business performed or the products which it sold may turn out to be flawed. This could lead to financial and other repercussions for the injured customer. Liability insurance would take care of the legal defense costs. If the business loses the case, it will also cover the financial damages for which the company is responsible.
Data breaches and cyber liability are a growing area of concern for countless businesses with online presences. Any business with a computer is potentially at risk for this type of cyber crime. Customers’ names, addresses, phone numbers, and sensitive credit card information can all be stolen this way.
Important sensitive business information can also be taken. Fixing the problems in the hacked computers and websites is the easy part. Making sure the customers and even business itself do not become victims is the complicated issue. Cyber liability insurance provides hacked businesses with important security and risk management services for the business and its customers at no charge. It also aids with needed forensic and legal help to track down the source of the breach and to prosecute where possible.
Another area that liability insurance assists business owners with is employment practices. Businesses that operate in a segment which has significant turnover will have hired and lost numerous full or part time employees. Any employees that have been let go can file legal action against their former employer without warning. Employment practices liability insurance protects business owners as well as officers, directors, and employees from these suits. It deals with lawsuits involving discrimination, harassment, wrongful termination, and other offenses while employed.
Business liability insurance is also important for another reason. Many individuals structure their businesses as partnerships or sole proprietorships. It may be that the business income and assets are insufficient to pay for all of the expenses of a lawsuit and associated claim. If they do not have business liability insurance any other expenses can be taken from their own personal income and assets. Owners of companies who are unprotected may also be sued for personal liability in certain cases. This is why every business should have the full coverage of business liability insurance.