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March 6, 2023
Not having general liability insurance coverage could put your business at serious financial risk.
Without liability insurance, it’s well-nigh impossible to protect your business from claims holding it responsible in the event of claims such as property damage, bodily image and even libel or slander. Not only does general liability cover certain business losses (should there be any), but it can also cover the people who interact with you on a daily basis: your employees.
Obviously, many other different types of risks are inevitable when running your own enterprise. This is why a comprehensive suite of insurance types for a small business is imperative, in addition to general liability coverage.
Below we’ll review a few different types of business insurance you should be aware of, then delve into broader detail about general liability insurance.
There are many other types of insurance in the small business arena too, such as cyber liability insurance, product liability insurance, unemployment insurance, disability insurance, business interruption insurance, business owners policy (BOP) insurance, commercial auto insurance and liquor liability insurance.
It’s up to individual business owners to decide which particular insurance coverage types they need as a layer of protection. But the lingering question for most business owners is how much — and to what extent — are they liable for?
As previously noted, general liability insurance shields your business from a customer or client’s potential claims of physical injury and/or damage of property. Claims of this nature may be precipitated by the goods, services or business activities your firm provides.
Without general liability insurance coverage, you risk having to pay claims out of pocket. For example, you may have to pay out-of-pocket for your employee’s medical care if they suffer a work-related injury.
Other scenarios could be a lawsuit based on allegations of reputational harm or copyright infringement; or your employee is accused of damaging the goods, or a client suffers an injury in your office. Hence, you must make sure you are adequately protected from as many adverse circumstances as possible.
Insurance providers evaluate the level of risk they are taking on before providing coverage for your business. They will require information about all your business’s activities and any potential weak points to determine how much you’ll pay for general liability insurance.
You may require more coverage as your level of risk increases. And as your business develops and changes, so too will your general liability insurance requirements. Keep an eye on your business’s operations to identify any areas that could expose you to additional liability.
Although you can’t foresee every turn, you can estimate how much general liability insurance you need. Knowing the variables that affect your coverage level is key.
Consider these important questions to help determine the amount of general liability insurance coverage you need:
In determining your level of liability and coverage needed in a general liability insurance policy, review the steps below — and think seriously about getting help from an insurance professional experienced with the nuances of small business insurance needs.
A plethora of factors determine the coverage, such as the size and value of the company, the parent industry, potential risks in the business you are in, etc.
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.
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