Should I Carry Business Liability Insurance?

Should I Carry Business Liability Insurance?

Owning and operating a small business comes with a lot of responsibility. Part of that responsibility is to yourself, to protect your assets and investments. Business liability insurance does that. According to, over 78% of all U.S. businesses are structured as a partnership or sole proprietorship. A partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits and losses. A sole proprietorship is the simplest form of business entity. It means one person owns and operates the business with that owner receiving all profits and has unlimited responsibility for all losses and debts. Both entities leave small business owners assuming all the responsibility if something should happen.

Business liability insurance pays the costs if you are sued for personal injury or property damages. It usually covers the damages from a lawsuit along with the legal costs. It’s your safety net in case of the worse scenario. Surprisingly many small business owners don’t carry business liability insurance because they feel its too expensive or they don’t carry enough insurance. But what many business owners don’t realize is that without business liability insurance you’re not only putting your business at risk. You’re also putting your personal assets in the line of fire. That means your personal assets including your family’s home could be taken to pay off a lawsuit or to pay compensation for damages. If you have business liability insurance, you’re covered and don’t have to come up with the money yourself. In short, every small business should have some kind of business liability insurance.

Your agency can advise you on the exact types of insurance that will fit your business needs but according to the U.S. Small Business Administration there are five types of business liability insurance you should be looking at.

General Liability Insurance
Business owners purchase general liability insurance to cover legal hassles due to accident, injuries and claims of negligence. These policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.

Product Liability Insurance
Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Product liability insurance protects against financial loss as a result of a defect product that causes injury or bodily harm. The amount of insurance you should purchase depends on the products you sell or manufacture.

Professional Liability Insurance
Business owners providing services should consider having professional liability insurance (also known as errors and omissions insurance). This type of liability coverage protects your business against malpractice, errors, and negligence in provision of services to your customers. Depending on your profession, you may be required by state government to carry such a policy.

Commercial Property Insurance
Property Insurance covers everything related to the loss and damages of company property due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism. The definition of “property” is broad and includes lost income, business, interruption, buildings, computers, company papers and money. Property insurance also comes in two basic forms. All-risk policies cover a wide-range of incidents and perils, except those noted in the policy. The other is peril-specific policies that cover losses from only those perils listed in the policy.

Home-Based Business Insurance
Contrary to popular belief, homeowners’ insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners’ policy to cover normal business risks such as property damage. However, homeowner’s policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.

If your still not sure what kind of business liability insurance might be right for you, just contact Omni Law Group’s experienced team. We can help you figure out what type of business liability insurance is right for your business needs.

Photo Credit: betsyweber

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