Insurance – Text
Check unknown vocabulary before you read the text:
accountable – liable to account for one's actions
utmost – of the greatest or highest degree, quantity, or the like; greatest
sole – belonging or pertaining to one individual or group to the exclusion of all others; exclusive
proprietorship – an unincorporated business owned by a single person who is responsible for its liabilities and entitled to its profits
misconception – a mistaken thought, idea, or notion; a misunderstanding
manner – a way of doing, being done, or happening; mode of action
omission – something left out, not done, or neglected
malpractice – any improper, negligent practice; misconduct or misuse; failure of a professional person to render proper services through reprehensible ignorance or negligence or through criminal intent, esp. when injury or loss follows
negligence – failure to exercise that degree of care that the law requires for the protection of other persons or those interests of other persons that may be injuriously affected by the want of such care
fallout – an unexpected or incidental effect, outcome, or product
peer – a person who is equal to another in abilities, qualifications, age, background, and social status.
Who Needs Business Liability Insurance?
Owning and operating a small business comes with plenty of responsibility and accountability. Even if you operate with the utmostcare and provide the best quality and services, a client can perceive you did them wrong. Is your business protected with liability insurance? Learn what all successful business owners know about small business liability insurance.
Over 78% of all U.S. businesses are structured as a partnership or sole proprietorship, according to Bizstats.com. For the majority of small business owners, this form of ownership puts your business and personal liabilities at risk. Owning business liability insurance protects both your business and personal life from financial ruin.
A common misconception of a limited liability company (LLC) or an incorporated company is a business owner is protected from personal liability and liability insurance is not necessary.
You can be personally liable if:
you have signed a personal guarantee for a loan you have personally injured someone you have acted in an irresponsible or illegalmanner you do not operate your business as a separate entity
What is Business Liability Insurance?
Business liability insurance protects your small business in the event of a lawsuit for personal injury or property damages. It will usually cover the damages from a lawsuit along with the legal costs. Depending on your business needs, liability insurance can be purchased in many forms.
Types of Business Liability Insurance
General Liability Insurance: This form of business liability insurance is the main coverage to protect your business from: injury claims, property damages, and advertising claims. General liability insurance also known as Commercial General Liability (CGL) may be the only type of business liability insurance you need depending on your business situation.
Professional Liability Insurance: Business owners providing services will need to consider having professional liability insurance known as errors and omissions. This coverage protects your business against malpractice, errors, negligence and omissions. Depending on your profession, it may be a legal requirement to carry such a policy. Doctors require coverage to practice in certain states. Technology consultants often need coverage in independent contractor work arrangements.
Product Liability Insurance: Small businesses selling or manufacturing products should be protected in the event of a person becoming injured as a result of using the product. The amount of coverage and the level of risk depend on your business type. A retailer of scrapbook supplies will have far less risks than a wood stove builder.
5 Buying Tips for Small Business Liability Insurance
The costs of covering your business and yourself from a potential lawsuit are high. After a decade of intense competition among insurers and low premiums, the fallout from the Sept 11 terrorist attacks and the stock market have increased insurance costs while providing less coverage. Every business owner renewing an existing policy or starting a new policy needs to shop for the best business liability insurance rates and coverage. Here are 5 tips to shop the best rates:
Belong to an Association: Many trade associations and business groups such as the Chamber of Commerce provide members the benefit of purchasing insurance at group rates. Explore alternative trade associations for lower rates and a possible fit with your business.
Compare coverage: The extent of business liability coverage varies from insurer to insurer.
Consider if and how much legal fees are covered. Review the policy details to know what is included and excluded in the coverage.
Assess your Industry’s Settlements: To gain a better perspective of the amount of coverage your small business needs, take a look at your industry. Review the recent legal actions and settlements in your field. Talk to peers and find their level of coverage. Using your peer feedback and industry research, determine the average legal costs and settlement to set your coverage limits.
Get the Package Deal: Purchasing separate types of business insurance from various insurers can quickly escalate your premiums. Depending on your business situation, it can make sense to buy a package of policies such as Business Owners Policy (BOP) to cover your business and save on rates. Be sure to understand the extent of coverage of the package. Not every type of insurance falls under a BOP. A business professional will often require a separate errors & omissions coverage.
Find a Specialist Broker: Your business and industry has unique needs and risks. To get the best available coverage and rates, consider working with an insurance broker who knows your business and has experience in your industry.
Protecting your small business from risks is the foundation of success. Take the necessary time to investigate your business liability insurance needs with an insurance representative, your industry association, and peers. It could be the most important decision to your company’s survival.