Liability insurance provides coverage that protects your business if it is sued for something that resulted in property damage or injury to someone. Given the number of attorneys offering contingency fees for their services, this type of claim is common. A typical example is a customer slipping and falling in your store or parking lot and suing your business for medical problems and loss of income due to not being able to work. Your liability insurance should cover costs related to your defense of the lawsuit and the cost of damages awarded by the court to the injured person.
There are a few approaches to determining whether you have the right amount of coverage. One way is to use a recent settlement within your industry as a guide. Another is to base your amount of coverage on your business’s assets. A good insurance agent will be able to guide you to making the right decision.
Major companies, like Farmers, offers coverage that can combine property and liability insurance. This is usually a good solution for a small business. You should discuss this with your agent to determine whether a combined coverage would be right for your business.
It is important to understand that liability coverage will not protect a business against nonperformance of a contract. This is covered by professional liability, or “errors and omissions” insurance. Employment legal issues, such as wrongful termination or sexual harassment, are usually covered by employment practices liability insurance.
Another important consideration is the size of your deductible. The higher the deductible, the less you will pay for the policy. Make sure, however, that you have enough funds to cover that higher deductible if a claim is made against your business.
Having the right liability insurance can save you a lot of money and, in some cases, enable you to stay in business. This is why it’s important to choose a good agent who is backed by a reputable insurance company.
Gregg L. Goodman, LUTCF is the CEO of the Gregg L. Goodman Insurance Agency, Inc. He is an agent for Farmers Insurance and provides life, health, homeowners and auto insurance, as well as commercial insurance programs. He can be reached at 661-254-6739.