Most people think of slip and fall accidents or worker's compensation claims when discussing business liability, but it covers far more than that. Business liability relates to a diverse set of legal situations and requires multiple insurance policies to cover all aspects. If you are just starting on your insurance journey, here are some things to keep in mind when it comes to your business.
As a business owner, areas of liability extend to every aspect of a business. You're liable for the slip-and-fall accidents, car accidents you or an employee cause while driving a company vehicle, defective product claims, negligence on the part of your employees, medical bills of worker's injured on the job, harassment and negligent hiring. Covering these many situations requires numerous insurance policies. Take into account what your business does and what work your employees will regularly be performing.
Essential business insurance types include general business liability, premises liability, commercial vehicle, home business, workers’ compensation, and state disability. While you can buy a standalone general liability policy, you can also purchase it as in a Business Owner’s Policy (BOP) which bundles liability and property insurance.
Certain types of businesses require additional insurance policies. For example, according to Pro-Vigil, car dealerships require numerous policies to cover its inventory and special security and lighting requirements.
Car lots need open lot coverage, also called auto physical damage coverage. Bars and restaurants require alcohol liability insurance. Manufacturers need product liability insurance and environmental and pollution insurance.
Obtaining multiple policies can get expensive. Consider what you really need. Talk to your attorney and insurance agent to determine the best policy combinations for you. Use the following discussion points as insurance conversation starters.
- If you work from home and only entertain clients there, you may only need home business insurance.
- If you own a vehicle you declare or use for commercial purposes, you must obtain commercial auto insurance. All US states require auto insurance on every vehicle on the road.
- If you hire employees, you must obtain worker's compensation insurance. If you use independent contractors instead, you avoid this requirement.
Also, consider that a general liability policy not only protects in the case of slip and fall lawsuits, but also tenant damage to your property and if you're sued for false advertising, misleading advertising, copyright infringement, libel, or slander.
If you open a bar or restaurant, you must carry premises liability. Other business types also have required insurance policies. Your attorney can tell you the legal requirements for your state and locality, as these vary.
Running a business requires more than the day-to-day work. It takes time, planning and financial investment, including insurance policies and state and federal taxes. While policies require an investment, they can pay off big by protecting your business if someone sues you. In our litigious society, that happens all too often. The right insurance protects your business by paying the settlement and court costs.