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INSURANCE
INSURANCE SERVICES GROUP
BUILDING A BRIDGE TO YOUR FUTURE
Liability
Liability Insurance
Every business faces some levels of risks, which is why most businesses need liability insurance. This coverage can help protect your business from claims, like malpractice or bodily injury, that could end in lawsuits or legal liabilities.
The level of coverage you need depends on the type of business you run, because every business has unique risks. For instance, construction businesses may need coverage with higher liability limits than retail stores. There are also different types of liability insurance coverage you’ll need to consider when looking for a policy.
Liability Insurance Types
The three main types of liability insurance coverage are:
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General and Public liability
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Professional liability
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Employer liability
General liability and public liability are often referred to as are the same thing, but they are two different forms of liability insurance.
General Liability
General liability insurance (GL) is often called:
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Commercial general liability (CGL)
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Business liability (BL)
It helps cover you against claims that your business caused bodily injury or property damage to others. It also covers reputational harm or errors in your advertising. It’s important to note that general liability insurance doesn’t cover property damage to your business or your employee’s property. A commercial property insurance policy helps cover those claims.
General liability insurance (GLI) is a package that includes public liability insurance and product liability insurance. It’s a great way to get the most important types of business insurance policies. If you can only afford one type of business insurance, this is the one to get. For most business owners, GLI is the ideal type of insurance because it covers you for types of situations resembling:
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Fixing damage done to property belonging to someone who is not you or your employee during your work
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Medical costs for injuries to a third party on your premises or through your work
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If a third-party sues you for sharing before and after photos of a site you worked on or a client you helped
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Damage caused by a product that you make or sell
Your policy may vary so while this is a general guideline, it’s important to check your specific policy for your coverage details.
General Liability Insurance Examples
General liability helps protect you if someone accuses you of:
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Bodily injury and property damages
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Reputational harm
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Advertising errors
Bodily injury includes any injury to a third party, like a customer or client, that happens at your business. For example, if a customer enters your flower shop, slips on your wet floor and breaks their leg, your general liability insurance can help cover the cost of their medical bills.
General liability insurance does not cover your business’s employees. Instead, they’re covered by your workers’ compensation insurance policy, a type of employer liability insurance.
Property damage includes any damage you or your employees cause to a third-party’s property. For example, if your landscaping company’s mower kicks up rocks that break a customer’s window, general liability would help cover the costs to repair the damage.
Reputational harm means another business is accusing your business of negatively impacting their reputation. Let’s say your workers compare your product to a competitor’s product during an event. When your competitor finds out, they file a lawsuit against your business. In cases like this, general liability can help cover your legal defense costs.
Some other examples of reputational harm include:
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Malicious prosecution
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Libel
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Slander
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Wrongful eviction
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Violation of privacy
Advertising errors involve liability claims of copyright infringement. If your marketing business use a copyrighted photo in an ad without permission, general liability insurance can help cover your legal defense.
You can get general liability coverage from private insurance companies, like The Hartford. Our specialists are available and can help you figure out the types of insurance your business needs. You can learn more by getting a small business insurance quote.
Commercial Liability
Commercial liability insurance can be another way of referring to general liability insurance. Sometimes, though, it means these three types of insurance coverage for businesses:
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Property insurance, which covers damage to your office premises or equipment
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Workers’ compensation, which pays for your employees’ medical costs if they are injured at work
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Public liability insurance
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If you are an electrician, workers’ compensation insurance would pay for medical costs if your employee fell off the ladder at work and sprained his ankle. Commercial property insurance would pay to fix your office’s hardwood floor that was damaged by the ladder when the employee came back in, and the price of a new ladder because the old one broke when it fell.
Public liability
Public liability insurance (PLI) pays out if someone breaks their wrist tripping over the loose carpet in your office or if you accidentally break a lawn ornament when cutting the grass.
Public liability insurance covers a person, a business, an event, a contractor – even a community building – for costs from legal action if they are found liable for death or injury, loss or damage of property, or economic loss resulting from their negligence.
If you own a business, you may be liable for damages or injuries to another person or property. Though liability insurance is optional in most cases, it is strongly recommended for businesses in all industries as the likelihood of being sued for negligence is unpredictable and potentially very costly.
You can usually choose whether to take out public liability insurance, but in some situations it might be compulsory.
For example, in certain public events and facilities, liability insurance is compulsory and it is checked through a licensing authority.
This type of insurance is becoming more popular, so you might find that it is automatically included in your property insurance policies – such as home, commercial, and marine – and in most business package insurances, but it is also available as a separate policy, particularly to larger businesses and to organisations without premises.
If you own a business, you may be liable for damages or injuries to another person or property. Though liability insurance is optional in most cases, it is strongly recommended for businesses in all industries as the likelihood of being sued for negligence is unpredictable and potentially very costly.
Public liability insurance won’t usually cover you if you are involved in known hazardous activities or criminal actions.
Though you might find that you are covered for public liability as part of other insurance products, make sure that the amount you are covered for public liability insurance is enough, because an insurer might offer a cheaper premium by including only a small amount of public liability insurance.
Make sure you know what your total public liability amount of cover is and that it is sufficient for your needs, particularly if the policy is packaged with other covers.
Professional Liability | Indemnity
You might take out professional indemnity insurance if you give professional advice or perform services to customers through the course of your work.
Professional indemnity insurance protects you from legal action taken against you if someone suffers a loss after following your professional advice or as a result of your receiving your service. There are also specific types of professional indemnity insurances for certain professionals. For example, the medical profession will usually have medical indemnity insurance as requirement of their professional registration or licensing.
Professional liability insurance becomes relevant if your client isn’t happy with the job you’ve done or says that you gave them bad advice.
For example, if you recommend a certain type of floor tiles which turn out to be dangerously slippery, your client could sue you. If you encourage a personal training client to keep pushing on, and they end up tearing their hamstring, that could result in a professional liability claim. Professional liability insurance will generally pay your legal costs and damages to your client.
Employer Liability
Employer liability insurance is an important part of workers’ compensation insurance. Workers’ compensation pays for your worker’s medical costs and lost wages if they are hurt while at work. But if your employee feels that their worker’s compensation isn’t enough, they could sue you for more damages which wouldn’t be covered by some basic workers’ comp policies.
For example, if you’re a personal trainer and your assistant drops a heavy dumbbell on his foot, workers’ compensation would pay the cost of treating his broken toe and his lost wages while he recovers. But if he also sues you because the dumbbell storage system isn’t good enough, those costs will likely be covered if you have employer liability insurance.
Product liability
If you manufacture products, sell or distribute products or import products into Sweden, you should have product liability insurance.
Product liability insurance covers you for damage or injury that you might cause to another business or person by your product or service.
This type of insurance is very important because people who believe that they have been injured by your product, can take action against you, as a manufacturer or importer.
In many cases, this action can be taken without the person who sues you having to prove you were negligent or had any intention to cause harm.
Umbrella Liability Insurance
This type of coverage differs from the previous ones insofar as it doesn't provide financial protection for a specific type of liability. Instead, an umbrella liability insurance policy acts as broad coverage to insure against risks that aren't covered by your other liability insurance policies, due to technicalities or other reasons.
Again, every business can use the protection of an umbrella policy, but some more than others. If your company faces any unusual or excessive risks, those are likely excluded from your primary insurance policies. But with umbrella insurance in place, those otherwise excluded risks will be covered.
Another important feature of umbrella liability insurance is that it provides financial protection when the limits of your primary insurance policies are exhausted. Suppose you're facing a $2 million product liability lawsuit, but your product liability insurance is capped at $1.7 million. Normally, you would have to pay the remaining $300,000 out of pocket, but if you have umbrella insurance, it will supplement your primary coverage and pay the excess.
The Importance of Liability Insurance
Many clients want to see that you have liability insurance before they agree to hire you. Liability insurance is not just a way to protect yourself, it also builds trust and helps you to get more work. You can show customers that you are a true professional with insurance behind you, in some cases gaining an edge over your competition.
If we haven’t already convinced you that liability insurance is important, take a moment to think about why your business matters to you. Remember that liability insurance is one more way you have to protect yourself, your family and the business you’ve worked hard to build. You invested in your business with your time, your energy and your skills. Liability insurance recognizes that investment and works to help you thrive, confident in what you can do.