Liability Insurance for Small Business

Liability Insurance for Small Business

small-business-liability-insuranceIn today’s very competitive business world, small businesses constantly scrutinize their business to cut costs wherever they can. Although their size may make them more nimble than their large competitors, their size also makes it much harder for them to achieve the economies of scale that larger companies can.

Although a small business owner might find it tempting to cust costs when it comes to insurance, this is a foolhardy and reckless decision. One accident claim, and a long-time business can be wiped off the map.

Although liability insurance for small business premiums can be costly, any small business owner cannot afford to be without at least some insurance to protect his investment and business.

The fact is that all 50 states in American require all business owners to carry minimum workmen’s compensation policies. Workmen’s compensation insurance protects a company’s employees if they are injured while performing their job. It provides coverage for both lost wages as well as medical expenses incurred from an on the job accident.

And in severe cases where a worker may be disabled long-term, or perhaps for ever, this coverage will provide the injured worker with either a lump sum payment or a lifetime annuity.

Aside from workmen’s compensation insurance, businesses are free to operate without any other insurance coverage if they can stomach the risk. Unfortunately, some companies have played this risky game and been caught out and destroyed with just one high payout claim. Is it really worth the agony, worry, and risk?

Let’s look at some of the risks that liability insurance for small business can protect a business owner from.

General liability insurance exists to protect a business against third party claims made by clients, customers, or innocent bystanders injured in the course of the business performing its business activities. Personal injury and property damage represent the majority of claims covered by general casualty insurance. If a customer falls while walking down a set of stairs at your place of business, this would be considered a personal injury claim. Property damage, on the other hand, usually pertains to a customer’s or other third party’s goods or personal property damaged by your business action. If a remodeling crew spilled a quart of motor oil on a customer’s white carpet while remodeling the kitchen, this claim would be handled under property damage.

However, many businesses need to closely assess their other major risks. So, just what kinds of coverage does the average small business need? It really depends on the nature of the business and the daily, frequent risk potential it faces. A manufacturer, for instance, should seriously consider product liability insurance. Such coverage could protect the manufacturer against injuries, business losses, or other negligence caused a customer using their products.

A side benefit that liability insurance provides is that the insured doesn’t stand alone when facing a claim from a third party. The insurance company, upon providing insurance, assumes the obligation to defend its client when that client is sued.  As long as the insurance company agrees the claim is covered by the insured’s policy, it will represent him against the claimant. This could include negotiations with the claimant’s representatives (another insurance company or its lawyers) and up to and including going to court if the claim progresses to that point.

When looking to purchase liability insurance, you need to look for two things: agent knowledge and personal rapport.

Since this protection could save you against catastrophic losses, you need to deal with a specialist who both understands your business and insurance law and trends. Ask friends or business associates for recommendations. A good, knowledgeable agent will inform, educate, and advise you on the best coverage for your situation.

Be sure the agent or broker you pick will give you the personalized after the sale service you need as well. This relationship will be especially critical if and when you are facing a major claim.

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