Nowadays, many business owners oftentimes neglect the importance of having proper insurance for their company. Therefore, when something goes wrong, those owners have no one to blame but themselves for having to cover hefty expenses. Regardless of the nature of your business, you must have business liability insurance.
That way, you ensure that your company assets are adequately protected and that unexpected costs can be easily covered, without a negative impact on your financial stability and status. One way or another, in the business world, something is bound to go wrong eventually. That’s why it’s better to be properly insured than it is to take care of legal responsibilities out of your own pocket. That being said, here are a few reasons why you need business liability insurance.
What exactly is business liability insurance?
Business liability insurance, otherwise known as Commercial General Business Liability is an insurance policy that protects your business, it’s employees and customers, as well as your business operations. This insurance covers costs, such as injuries, property damage, copyright infringement, legal claims, legal defence and settlements when business is being sued. In general, this insurance protects you and your business from liability that is commonly associated with business operations and dealings.
By having a business liability insurance, your company can efficiently handle any legal issues, without having to suffer substantial financial losses. Thinking that your business can successfully avoid any claims is a mindset that will get you into trouble really fast. The main reason is that people won’t hesitate to file a claim if you manage to wrong them in any way or if they believe they can get money out of you for whatever reason. That’s why it’s better to be safe than sorry.
Why do you need insurance?
In the modern business world, various companies are faced with many different challenges. Some of those challenges are legal claims made against them. For instance, dissatisfied customers may sue a company for negligence, such as failing to perform a promised service or failing to deliver product quality. Moreover, other companies may sue you for slander or copyright infringement.
What’s more, someone may get injured while on the company’s premises and make claims against the company. Either way, the costs of fighting such cases in court can go up to millions of dollars. On the other hand, business liability insurance premiums cost from $700 to $2000 per year, based on the amount of coverage your business needs. You can even obtain this insurance through your BOP (Business Owner’s Policy) where liability insurance and property insurance are included.
How much coverage does your business need?
Your insurance coverage is determined by the nature of your business. If your business has more risks involved, you’ll need more coverage. For instance, construction companies have more risk of injuries than office businesses. Therefore, they require more coverage for their liability insurance. Various insurance companies offer different coverage premiums, which means you should take the time to research the proper insurance for your business.
In addition, your business’s location will also play a vital role in determining your insurance coverage. However, not every coverage premium may suit your business needs. In that case, you should consider personalised business liability insurance. That way you can tailor your specific needs into your insurance coverage. You must ensure that every aspect of your business is properly covered so that you don’t have to worry if something goes wrong.
How does business liability insurance work?
The way business liability insurance works is that an insurance company provides you with a specific amount of funds to cover your legal fees. An insurance company will layout the specific amount of funds they’ll pay against a certain liability claim. These amounts are specified in your insurance policy plan. As an example, let’s say another company sues yours for copyright infringement.
They want $280,000 compensation plus an extra $100,000 for legal fees and costs. Now, your insurance can cover $300,000 for the liability claim, which is the maximum amount for your premium. That means you must cover the $80,000 difference in costs. On the other hand, without business liability insurance, you’d have to pay the costs in full out of your own pocket.
Many businesses neglect the importance of business liability insurance until they’re faced with substantial costs of fighting a claim in court. This insurance protects your business from such claims and helps you cover the costs. If you want to adequately protect your business, it’s better to obtain proper insurance than it is to risk the future of your company.