Planning for potential accidents, damages, and liability claims is an essential part of every business strategy.
Having the right insurance to cover not just your personal property but also your business, services, and products, can protect you the heavy financial burdens of legal battles.
Finding the right general liability insurance will help you build a strong future for you and your company. Yet, for certain fields, it may not be enough.
When your business is dependant on services and opinions that you provide, your mistakes or things you may have left out unwittingly, you may need broader coverage.
That’s where professional liability insurance, otherwise known as E & O insurance may be a huge asset. Let’s take a deeper look into the two.
General Liability Insurance
What is it?
While you most likely have it, not all business owners fully understand general liability insurance, especially if it is lumped in with your Business Owners Policy (BOP).
General liability insurance, which goes by many names, like business liability insurance, commercial general liability, and others, is designed to protect you and your business from third-party, general claims of bodily injury or property damage.
Broader coverage can include business to business coverage like reputation harm and advertising injury, which involve less physical damage, but nonetheless cause harm, even unintentionally.
What does it cover?
General liability insurance can make sure that if you own a retail store, for example, and someone falls on site and requires medical intervention, those damages are covered.
It can also protect you against claims by your landlord of property damage, and personal injury cases.
These “third party” claims can happen at any time for many businesses, which is why while it isn’t often required by law, many customers will require you to have general liability insurance in order to work with you.
How common is it and how much does it cost?
Clearly, your industry will have the biggest impact on risk, and therefore how much your policy will cost.
For example, low- risk industries like accounting and media will likely have significantly lower rates than high-risk ones like contractors and manufacturers.
Contractors and the like will face high premiums, but are also much more likely to need to put their policies into action.
Therefore, putting an overarching price on general liability insurance is not necessarily indicative; some industries can average as low as $400 a year, while others can be in the thousands.
Typically, small businesses opt for $1 million to $2 million limits, but working with a skilled broker can help you pick the right option for your specific needs.
Knowing how much exposure you are likely to face will help you choose a reasonably priced plan for your industry.
Professional Liability Insurance
What is it?
These days, professionals can face a wide range of potential lawsuits, beyond traditional property and injury claims.
Professional Liability insurance helps protect against liability in the event that in the course of providing services or professional advice, mistakes or omissions were made.
This insurance covers financial losses that these mistakes caused to third parties.
Who is it for?
Anyone regularly providing opinions, services, and provides advice should consider this type of insurance.
This could range from beauticians and personal trainers, whose well meaning recommendations could end up physically harming the client inadvertently, to mental health professionals and photographers, whose perspective proved displeasing or damaging in the long run.
Another great example is technology professions, because if, for example, a customer’s technology fails, it can affect their business tremendously and end up a lawsuit, but traditional insurance is not designed to deal with such a case.
What does it cover?
While every policy is different, and your field may need certain types of niche coverage, professional liability insurance can protect against alleged negligence, mistakes, copyright infringement, or personal injury, which includes libel and slander.
If, for example, your branding efforts turn out to be uncomfortably close to that of your competition, copyright infringement protection may be necessary, even if it was entirely coincidental.
This insurance can also cover defense costs, previous services that you provided, and other variables, like temporary staff. This is of course all dependant on the policy you choose.
How much does it cost?
Much goes into determining the cost of a policy, including industry, the size of your business, and what the average day looks like.
Looking up your industry can be more helpful than a general number to find out if you would like to explore this kind of insurance.
While not cheap, professional liability insurance can in rare cases venture below $500 a year, but is more likely to be at the $1,000 range or above. Depending on what your risk factors are, it may be well worth it.
Why you May Need Both
When deciding how much coverage to pursue, understanding your field and playing out scenarios in which different policies may be useful can give you a better picture of what you may need.
Particularly in fields where your professional opinion matters, like consulting, traditional insurance designed for brick and mortar shops may not be covering you in areas where you need it most.
Working with a broker to get the full picture of your risk, and may lead to an understanding that having both kinds of insurance may pay off in the long run.
Having quality insurance protection in place can provide you the peace of mind to trust your professional instinct without constant worry.
Contact Frontlight today to what kind of liability insurance you need in 2019.