Don’t assume that having an LLC (Limited Liability Company) or Corporation excludes you from personal responsibility against certain liabilities. Here are the different types of Liability Insurance you may want to consider in the scope of your small business:
- General Liability Insurance: General liability insurance will cover you if somebody is injured on your premises or in the scope of your business, if you (or an employee) damages somebody else’s property, or if there is an advertising claim. It is one of the most important forms of insurance your business can have, and is also referred to as Commercial General Liability insurance.
- Professional Liability: This one is especially popular (and at times legally required) in the medical, financial, and technology industries, and is also referred to as Errors & Omissions insurance. It will protect you against negligence, malpractice, and errors. It’s easier than you think for this to happen; a painter friend of mine recently got paint on some cars parked (illegally) near where he was spraying, and despite the fact that he personally cleaned the cars, he received an outrageous bill from a car owner for detailing.
- Product Liability: If you manufacture or sell a product that could somehow result in the injury of your customer, then product liability insurance is for you. Remember to think outside the box when considering your need for this type of insurance; funny things happen.
You can sometimes get a “Business Owners Insurance” policy which combines Property, Casualty and Liability insurance.
Property insurance covers damage to the business premises. For example, if a fire rips through your building, your property insurance policy will help you replace items such as equipment, furniture, carpeting, lighting, and inventory. If you operate a business whereby customers leave objects with you (for servicing or maintenance, for example), then their items will be covered too.
You can also bulk up your property insurance policy by adding in protection against fraud, robbery, employee theft/embezzlement, and electronic protection against viruses or hackers.
If you rent your business premises, be sure to check if there is property insurance coverage through your landlord, or if you are required to provide your own protection.
This form of insurance is often legally mandated if you have employees, and covers employees who are injured in the course of their work, or on the business premises.