Guide to Liability Insurance Coverage for Your Business

No matter the nature of your business, you must take measures to safeguard against potential risks and liabilities, which could include lawsuits.

A comprehensive business insurance package often includes general liability coverage, which protects against a wide range of common risks businesses face.

General Liability Coverage Examples

The following scenarios are typically covered by general liability, as detailed on

  • Claims relating to bodily injury: If a third party, such as a customer, slips and falls on your business premises or otherwise injures themselves and blames you, general liability insurance will reimburse for legal costs.
  • Claims relating to property damage: If a third party, such as a customer, claims to have had their personal property damaged due to your business, general liability will reimburse for legal costs.
  • Claims relating to advertising injury: If your business’s advertisements cause harm to a third party, such as emotional harm, general liability insurance will cover the legal costs.
  • Medical payments: General liability insurance will also cover medical costs stemming from injured third parties on your business premises or who claim to have been injured by your business’s operations. Coverage kicks in regardless of actual fault.
General Liability Insurance Coverage

Role of Liability Insurance in Business Risk Management

Having no liability insurance is like driving without a car insurance policy. You’re taking a considerable risk and could land yourself in a bad situation.

Liability insurance protects your business from being sued if something goes wrong. It’s the first step in protecting yourself from litigation and is often the only thing between you and an out-of-control lawsuit.

It’s not uncommon for someone to file a frivolous lawsuit, hoping that the other party is too busy defending themselves to respond in kind. Unfortunately, if your business doesn’t have liability insurance, it could be open to lawsuits, even if they have no merit. A good liability insurance policy will help defend your company against these frivolous lawsuits.

Factors Affecting the Cost of Liability Insurance

Liability insurance for Michigan businesses can range in price depending on numerous factors, and companies are often rated based on the unique risks they face.

Other cost factors may include:

  • Industry type
  • Location
  • Number of employees
  • History of claims
  • Annual profits
  • Additional coverages

Beyond General Liability: Additional Policies to Considers

Remember that general liability insurance is just one type of coverage needed, as you may have liability risks beyond the scope of public liability insurance.

Commercial general liability insurance (CGL) can be purchased as a stand-alone policy or as part of a business owner’s policy (BOP). 

Depending on the type of work you do, you might need additional policies:

Commercial Umbrella Insurance: Provides extra protection for high-risk businesses. Under umbrella insurance, your policy limit is increased, meaning your insurer can cover more expensive lawsuits. 

Professional Liability Insurance: Protect your business from consequential loss resulting from negligence claims associated with your professional service. Professional liability claims involve allegations whereby the customer alleges they lost revenue or incurred expenses because of the negligent rendering of professional services. 

Workers Compensation Insurance: Worker compensation insurance gives employees benefits to help recover from work-related injuries or illnesses. It can also benefit your employees’ families if they die in a workplace accident.

Cyber Liability Coverage: Cyber-related losses generally involve loss or damage to data and other intangible assets, including customer data, intellectual property, and related expenses associated with a loss event. 

Business Property Insurance: Commercial property insurance is essential for business owners, even home-based businesses. The concept of “Property” can include various things, such as lost income, business interruption, buildings, computers, cash, and valuable papers.

To learn more about crucial business owners’ policies, check out our guide to Understanding Business Insurance.

Advantages of Independent Agents for Liability Insurance

When you research your options for purchasing general liability insurance, you will encounter independent agents and ‘captive agents.’ Captive agents work for only one insurance company. An independent agent represents multiple insurance companies primarily focusing on you, not the carrier.

No one is more qualified to help your business find the best liability coverage than an independent insurance agent. Independent agents search multiple carriers to find providers that sell liability insurance, deliver quotes from many sources, and help you compare to find the best combination of coverage and cost.

The Takeaway

In conclusion, liability insurance is a fundamental aspect of protecting your business. Operating without it poses significant risks while having proper coverage serves as a crucial defense against potential litigation. By understanding the scope of liability insurance, considering additional policies, and leveraging the expertise of independent agents, you can ensure the comprehensive protection your business needs.

Take Action to Safeguard Your Business

Find out how Mason-McBride can help protect your business and request a proposal.

For helpful tips on other popular topics, check out articles on:

Article By Jamie Parry

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