Did you know that anywhere between 30-50% of small businesses are sued every year? No matter the size of your business, it could be at risk of making a legal mistake – and a costly one at that. See, legal mistakes and liability lawsuits happen all the time.
The unfortunate reality is that many small business owners believe they’re unlikely to face a lawsuit and therefore don’t take any action to protect themselves against the possibility of one due to the size of their business. Both large and small businesses are at risk of a lawsuit. That’s where having business liability insurance is critical.
First of all, let’s examine what business liability insurance is?
What is business liability insurance ?
Whether your business is small, medium-sized, or large, it needs liability insurance to protect itself from expenses arising due to lawsuits filed against it. Business liability insurance is a general term encompassing multiple different types of liability insurance, all of which have different purposes/definitions that help to protect unique businesses.
Liability insurance is a must-have. Business liability insurance is designed to protect companies and enterprises against what is potentially one of the biggest risks facing companies: lawsuits. Lawsuits can happen for any reason. They can happen due to bodily injury, property damage, personal and advertising injury (such as libel and slander), medical expenses, alleged financial loss due to negligence or errors and omissions, liability out occupancy, and so much more. One of the largest brokers in business liability insurance is Easycover Insurance. They can design business liability insurance to protect your business against many risks.
Let’s break down the various different types of liability insurance that are available.
General Liability Insurance
General liability insurance is the most common form of business liability insurance , and the rest of Canada. It protects businesses against claims made by third-parties alleging property damage, bodily injury, or personal/advertising injury.
Professional Liability Insurance
Professional liability insurance, or E&O insurance, protects businesses against claims made against them alleging financial loss as a result of a professional service/advice your company offers. This insurance is specific to professionals only and claims may be made as a result of negligence, errors, omissions, breach of duty, misrepresentation, and so forth. Talking about this type of insurance, EasyCover: Your Destination for Canadian Liability Insurance Solutions
Product Liability Insurance
If your business deals in the offering of a particular product, it needs product liability insurance. Often coupled with product recall insurance, product liability insurance protects your business against claims made against it alleging bodily injury or damages due to a defective or faulty product.
Commercial Auto Liability Insurance
If your company utilizes vehicles in its everyday operations, then it needs commercial auto insurance. If those vehicles are involved in an accident where a third-party is injured or their property is damaged, your business would be held liable for the consequential expenses. and through all of Canada, insuring any automobile operated on public roads is a must, and it’s illegal to operate any commercial van, bus, car, or truck without insurance.
Common Claims Scenarios for Business Liability Insurance
While the list above is a few samplings of the most popular forms of business liability insurance, there are many more forms of liability insurance available to protect your business. Work with a broker to determine what options are best for your circumstances.
What exactly does a typical claim look like for business liability insurance ? Let’s run through some examples, and detail which form of liability insurance would respond in each instance.
Scenario 1 – You own a retail store with an elaborate, eloquent light fixture. While a shopper is visiting your store and browsing your goods, a part of the light fixture detaches and falls onto the head of the customer, injuring them. The customer then sues your business for their injuries, alleging your negligence in maintaining your décor caused their accident. In this instance, CGL insurance (or commercial general liability) would respond, as this is a bodily injury claim.
Scenario 2 – You run a restaurant. You create a new chicken dish and several of your patrons order it. Unfortunately, the chef undercooks the chicken and the customers all suffer food poisoning as a result. One or more customers sue, alleging their injury was a result of your negligence. This type of claim might be covered under a product liability insurance policy.
Scenario 3 – You run an accounting firm that is known for its reputation of giving excellent advice. A long-time client comes to you to help do their taxes. One of your employees, an accountant, makes a calculation error which results in the client having to pay a penalty. Alleging financial loss, the client sues your accounting firm. This type of claim may be covered under a professional liability insurance policy.
Scenario 4 – Your fleet of vehicles is used for your business to carry out day-to-day deliveries. One of your newer employees is driving one of the company vehicles to do a delivery and accidentally rear-ends another vehicle on the road. In this instance, any liability expenses may be covered by a commercial automobile insurance policy.
Scenario 5 – Your business creates a dazzling new ad campaign. While this gains a lot of traction and attention, another business declares you’ve used their advertising idea and sues you for copyright infringement. This could be covered under commercial general liability insurance. In some instances, like if you were a digital media company that created ads for clients, and an ad of yours contained content that caused another copy to sue the client for copyright infringement, the client might turn around and consequently sue your company. In this instance, professional liability insurance would cover your business for the arising costs.
There’s a lot of different situations where business liability insurance can kick in and help spare your business from irreparable losses. In the event you are new to business insurance, it’s not a bad idea to enlist a broker to work with you and navigate your coverage with you.