Insurance coverage provides a wide range of protection for us from unpleasant situations. There are several types of insurance available to cover different situations. One of which is liability insurance coverage. Below is a summary to educate you on liability coverage for businesses. Read on to find out more.
What Is Liability Insurance Coverage for Businesses?
Liability coverage is a form of insurance that protects a policyholder from claims and lawsuits resulting from injury or damage to a third party or their property. This coverage comes in handy when you are liable for the damage or injury. This coverage is mostly purchased by car owners, small and large business owners, and professionals.
How Does Liability Insurance Coverage Function?
Liability coverage protects you from the financial burden attached to the injury and damage you cause to others. It also compensates the injured party for any loss or damage they may have suffered from your actions or business.
Types of liability coverage
1. General Liability
General liability coverage provides coverage for your business during claims of physical damages such as
- bodily injury occurring within your business premises
- bodily injury resulting from using your product
- property damage
- libel and slander
2. Professional Liability
Professional liability coverage, otherwise known as errors and omission coverage, is insurance that protects your business from claims due to unprofessional conduct.
3. Employers’ Liability
This insurance covers employers from the cost of damage to their employees, not covered by workers’ compensation.
General Liability Vs. Professional liability: Differences
Although both are liability coverage; they differ in:
1. What They Cover?
General liability covers physical damages like bodily injuries, property damage, and the expenses resulting from related lawsuits. On the other hand, professional liability covers damage due to unethical professional acts like providing poor advice, acting in bad faith, infringement of copyright, etc.
2. Claims-made Coverage Plan
For general liability, despite the time of damage, you will still be covered as far as you have an active policy when the claim is filed. However, for professional liability, the coverage does not include an event that happens before your policy activation.
General liability Vs. Professional Liability: Similarities
1. Required for Finalizing Contracts
Some partners require that your business have one or both liability coverage. This is because they want the certainty that you can cover the risk in case of resulting damage. Even the law in most states demands that practicing professionals also have liability coverage. Just like in the cases of doctors and lawyers.
2. What It Will Not Cover
General and professional liability coverage will not protect you if the damage caused is intentional or if the lawsuit is due to criminal actions.
3. Varying Premium
The amount paid for the premium varies depending on the risk attached to your business for general and professional liability. For example, a real estate builder will have a different risk level compared to a diner or café.
The Bottom Line
After considering both liability coverage options, we can establish that they each have different areas where they come into play. So, it is imperative as a business owner to have either one of the two or both. Weeks and Associates Insurance, Thousand Oaks, California, is always available to cater to your insurance needs. Our team of insurance experts is always there to assist you. Contact us to get a quote today!