Understanding Company Liability Insurance

As a business owner, it is crucial to be aware of the risks that come with running a company. One of the biggest risks is the potential for lawsuits, which can result in significant financial damages. To minimize this risk, many businesses opt for company liability insurance. In this article, we will explore what company liability insurance is, what it covers, and how it can benefit your business.

What is Company Liability Insurance?

Company liability insurance is a type of insurance that provides coverage for legal costs and damages that arise from claims of third-party bodily injury, property damage, or personal injury. This insurance protects your business from the financial consequences of lawsuits that result from accidents or other incidents related to your business operations.

There are several types of company liability insurance policies, including:

It is important to note that company liability insurance does not cover intentional acts, criminal activity, or breach of contract. It also does not cover claims of injury or damage that arise from an individual’s own actions, such as slipping on a wet floor.

What Does Company Liability Insurance Cover?

Company liability insurance covers the costs of legal defense and damages awarded in a lawsuit. Specifically, it covers:

• Legal defense costs, including attorney fees, court fees, and settlement costs.
• Compensation for bodily injury or property damage caused by your business operations or products.
• Compensation for personal injury claims such as defamation or invasion of privacy.
• Compensation for professional negligence, errors, or omissions in your services.
• Compensation for wrongful acts committed by your directors or officers.

Depending on your policy, company liability insurance may also cover:

• Product recalls and related expenses.
• Advertising injury claims such as copyright infringement or false advertising.
• Medical expenses and lost wages for injured third parties.
• Damage to rented or borrowed property.

Why Do You Need Company Liability Insurance?

There are several reasons why your business may need company liability insurance:

• Protects your business assets: Without liability insurance, a lawsuit could potentially bankrupt your business. Liability insurance protects your assets and ensures that you can continue operating your business.
• Required by law: Depending on your industry and location, you may be required by law to carry liability insurance.
• Increases credibility: Having liability insurance shows your clients and customers that you are responsible and take their safety seriously.
• Provides peace of mind: Knowing that you are protected in the event of a lawsuit can help alleviate the stress and anxiety that come with running a business.

FAQ

What is the difference between general liability insurance and professional liability insurance?

General liability insurance covers claims of bodily injury or property damage caused by your business operations or products. Professional liability insurance covers claims of negligence or errors in your professional services. If your business provides professional services, such as legal or medical services, you may need both general liability and professional liability insurance.

How much company liability insurance do I need?

The amount of liability insurance you need depends on your business and its risks. A general rule of thumb is to have at least $1 million in liability insurance coverage. You may need more or less depending on your industry, size of your business, and the types of products or services you offer.

What is not covered under company liability insurance?

Company liability insurance does not cover intentional acts, criminal activity, or breach of contract. It also does not cover claims of injury or damage that arise from an individual’s own actions, such as slipping on a wet floor.

What is D&O liability insurance?

D&O liability insurance covers claims of wrongful acts committed by your directors or officers in the course of their duties. This can include claims of breach of fiduciary duty, negligence, or mismanagement. D&O liability insurance is typically purchased by larger companies with a board of directors.

Is company liability insurance tax-deductible?

Yes, company liability insurance premiums are tax-deductible as a business expense.

Conclusion

As a business owner, company liability insurance is an essential investment to protect your business from the financial consequences of lawsuits. Whether you operate a small business or a large corporation, having liability insurance can provide peace of mind and protect your assets. If you are unsure about which type of liability insurance you need, speak with a licensed insurance professional to determine the right coverage for your business.