Running a business involves inherent risks. But for those who are just starting out, their focus often shifts toward immediate priorities. However, the smooth operation of a business is not all about product development or securing customers. It is also about protecting yourself and your venture against potential liabilities. Securing liability insurance can help set your business on a solid foundation for long-term success.
Here are three types of liability insurance that business owners must know about:
General liability insurance
As the word suggests, general liability insurance covers “general” claims. There may be a time when your business may face accidents involving customers, clients or the general public. Even if it is highly unlikely, getting this insurance can safeguard your business from potential legal and financial liabilities. It offers protection against:
- Bodily injury
- Property damage
- Personal or advertising injury
- Medical payments
- Products-completed operations
- Damages to rented premises
These are just examples. But if any of these happens, you can get support for legal expenses, medical bills or property repair costs.
Business Owners Policy (BOP)
A business owners policy (BOP) combines property, business interruption and liability insurance into one policy. It covers many risks, such as:
- Physical damage to business components
- Fire damages
- Bodily injury
These are just examples of the risks a BOP covers. It is a comprehensive insurance package for small and medium-sized businesses. It is ideal for restaurants, retail stores and wholesalers. However, BOP insurance does not cover employees.
Employment Practices Liability Insurance (EPLI)
Some insurers offer EPLI to endorse their BOP while others provide it as a stand-alone coverage. EPLI safeguards businesses against various types of employee lawsuits. These include those related to:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
EPLI costs depend on factors such as the business type and number of employees. The past employment practice lawsuits may also matter. Regardless of the outcome, this insurance covers the costs of defending a lawsuit. It can also provide reimbursement for judgments and settlements.
Liability insurance is a must-have for businesses. It acts as a safety net and protects them from potential risks and claims. Without liability insurance, businesses could face significant financial burdens that may cripple their operations or even lead to closure.