What is business or commercial liability insurance?

All businesses face risks. No matter how careful you are, a customer could slip and fall on your property; one of your employees could be injured while on the job; or, you might accidently use a copyrighted photo in your advertisement. We live in a litigious society and a single lawsuit can have the potential to cripple your company and deplete your savings – which is why liability insurance is an essential part of any business insurance plan.

Here is a primer on the different kinds of commercial liability insurance available and how they can protect you and your business.

All businesses need liability insurance, but depending on the kind of business you operate, here are some specific types of liability coverage you may want to discuss with your insurance representative:

• General liability
• Management liability
• Umbrella/Excess liability
• Professional liability
• Workers compensation
  

A general liability policy helps provide protection if someone accuses your business of causing physical damage to them or their property, harming their reputation or violating their privacy, or using copyrighted material without permission. In today’s uncertain world, your liability risk today might differ from what it has been in the past, so it’s important to have a general liability policy in place that will evolve with you, covering new exposures as they are introduced.

Management liability insurance is a collection of coverages designed to help protect management teams and boards of directors from lawsuits alleging mismanagement. It generally includes directors & officers (D&O) insurance; employment practices liability; fiduciary liability; and commercial crime insurance. 

Commercial umbrella insurance provides an extra layer of liability protection that can cover costs that exceed the limits of some of your primary liability insurance policies. It can help cover claims of bodily injury, such as an injured customer or employee; and damage your business causes to someone else’s property.

If your business provides a service to others, you may need professional liability insurance, also known as Errors & Omissions (E&O) insurance. Professional service firms, media organizations, public entities, consultants and staffing firms are just a few types of businesses that are constantly at risk of being sued over the services they perform and the information they disseminate. A professional liability policy can provide protection, even if the lawsuit is without merit.

To learn more about professional liability, see What Is Professional Liability or E&O Insurance?

If you have employees, you may be required by your state to purchase a workers compensation policy, which is a type of employer liability insurance. Workers compensation policies provide coverage if an employee is injured or gets sick because of their job. It can pay for medical care and help protect your business from lawsuits due to work injuries or illnesses.

Every business is different and has its own unique liability risks so it’s always important to review your coverage options with your agent or broker.