When you have the right tools and insight, protecting yourself from unforeseen circumstances is easy. In fact, now that the weather is warmer, you’ve probably been taking a few cautionary measures, like applying sunscreen, to avoid the unpleasant consequences of a sunburn.
So, why not do the same for your business? If you’re an entrepreneur, understanding the different types of liability insurance can help you not only protect your business, but also prevent potential risks, too.
Just like different people require different levels of SPF to shield their skin from harmful UV rays, there are specialized types of liability insurance that cater to your business’s specific needs and inherent risks. Today, we’ll be focusing on a few kinds of liability insurance to help you assess which one is right for your business and your industry. If you’re unsure what type of insurance will best protect your business’s interests, a qualified insurance broker can help you select a policy that works for you.
What is Liability Insurance?
Whether you’re a corporate business or an independent contractor, having the proper liability insurance for your industry is crucial for protecting your business, employees and even customers against third-party claims and costs that pertain to your business.
Here are three types of liability insurance policies that will help you safeguard your business’s reputation and financial well-being:
- . General Liability Insurance: Available to both homeowners and business owners, general liability insurance is the most common type of liability coverage available— it will assist your business in covering any fees that result from claims, investigations or court proceedings that are related to a third-party injury on your property, such as an injury following a slip and fall on the company’s sidewalk.
Many general liability insurance policies will cover a broad range of incidents, including coverage for landlords or property owners who require protection against damage caused by tenants.
- Errors and Omissions (E&O) Insurance: Also called “professional liability” or even “malpractice” insurance, E&O is designed to protect service professionals from claims of malpractice or professional misconduct. Professional liability insurance is a necessity for individuals who have a specialized business that provides personal services like health examinations, hair and/or beauty services, financial planning or legal advice.
For example, a financial planner may be sued by a client who is unhappy with the results of an investment, despite the client’s own decision to invest in a risky stock. E&O helps to protect the business and employee from financial consequences of the claim.
- Directors and Officers Liability Insurance (D&O): This specific type of liability insurance can help protect a company’s managers, directors and officers against claims of corporate mismanagement, including financial loss, failure to comply with workplace safety and even wrongful firing. A D&O insurance policy can help alleviate costs and protect personal and corporate assets—even non-profit organizations require D&O insurance.
D&O offers comprehensive coverage to protect not only the interests of the business, but also the well-being of the director or officer in question. Investopedia outlines three circumstances that may be covered within a D&O policy:
- Directors or officers are covered if the business refuses to pay or declares bankruptcy.
- The D&O policy will help protect the business and its assets from losses and legal fees related to an officer, director or manager’s misconduct.
- In some cases, the coverage for the entire corporation, agency or business may be extended to its assets and its employees.
In addition to a comprehensive liability insurance policy, assessing your corporation’s risks, helping clients understand their risks, and ensuring that your directors and officers are fully aware of their duties can help reduce the number of claims or lawsuits filed against your business.
Discover Comprehensive Insurance Coverage for Your Business.
Your business deserves more than just great insurance coverage. Acumen’s team of qualified insurance brokers have the experience and knowledge that you need to select the best policies for your unique business. Contact our brokerage today to discover commercial insurance options, advice and claims guidance that reflect your businesses’ risk tolerance and protect your assets.