NC Liability Insurance: Understanding the Basics

If you own a business in North Carolina, it’s important to understand liability insurance. Liability insurance provides financial protection against claims or lawsuits arising from injuries or property damage caused by your business operations, products, services, or employees. In this article, we’ll take a closer look at North Carolina’s liability insurance requirements, coverage options, and how to choose the right policy for your business.

NC Liability Insurance Requirements

North Carolina law requires businesses to have liability insurance coverage when they have employees. The minimum requirements are:

Policy	Minimum Coverage
Workers’ Compensation Insurance	$100,000 for each accident
Employer’s Liability Insurance	$100,000 for each person
General Liability Insurance	$1,000,000 per occurrence

Note that these are only the minimum requirements. Depending on your business type and industry, you may need additional coverage.

What is Workers’ Compensation Insurance?

Workers’ compensation insurance provides benefits to employees who are injured or become ill due to their employment. In North Carolina, all employers with three or more employees are required to carry workers’ compensation insurance. The coverage includes medical expenses, lost wages, and rehabilitation costs. Employers can purchase workers’ compensation insurance from private insurance companies or through the North Carolina Workers’ Compensation Insurance Plan.

What is Employer’s Liability Insurance?

Employer’s liability insurance provides additional protection to employers in case an employee files a lawsuit related to a workplace injury or illness. This coverage is often included as part of a workers’ compensation policy. The policy can cover legal defense costs, settlements, and judgments.

What is General Liability Insurance?

General liability insurance provides coverage for claims related to third-party bodily injury, property damage, or personal injury. It can also cover claims related to advertising injury or product liability. The policy can cover legal defense costs, settlements, and judgments. General liability insurance is essential for businesses that interact with the public or have clients visiting their premises.

NC Liability Insurance Coverage Options

North Carolina businesses have several options when it comes to liability insurance coverage:

Business Owner’s Policy (BOP)

A business owner’s policy combines general liability insurance and property insurance. It’s a cost-effective solution for small businesses that need basic coverage. However, BOPs have limitations on the coverage amount and may not be suitable for all businesses.

Commercial General Liability (CGL)

A commercial general liability policy provides comprehensive coverage for claims related to bodily injury, property damage, or personal injury. It can also cover claims related to advertising injury or product liability. CGL policies are customizable and can be tailored to suit your business needs.

Professional Liability (Errors and Omissions)

Professional liability insurance provides coverage for claims related to professional errors, omissions, or negligence. It’s essential for businesses that provide professional services or advice. The coverage can include legal defense costs, settlements, and judgments.

How to Choose the Right Liability Insurance Policy

Choosing the right liability insurance policy can be overwhelming. Here are some things to consider:

Assess Your Risks

Identify the potential risks associated with your business operations, products, or services. This will help you determine the coverage amount and the type of policy you need.

Consider Your Budget

Liability insurance premiums vary depending on the coverage amount, business type, and industry. Choose a policy that fits your budget without compromising on coverage.

Shop Around

Get quotes from multiple insurance providers before making a decision. Compare the coverage, premiums, deductibles, and policy limits.

Review the Policy

Read the policy documents carefully to understand the coverage, exclusions, and limitations. Ask questions and clarify any doubts before signing the policy.

FAQs

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

General liability insurance provides coverage for claims related to third-party bodily injury, property damage, or personal injury. Professional liability insurance provides coverage for claims related to professional errors, omissions, or negligence.

What is the minimum liability insurance requirement for North Carolina businesses?

The minimum liability insurance requirement for North Carolina businesses with employees is workers’ compensation insurance, employer’s liability insurance, and general liability insurance.

What is not covered by liability insurance?

Liability insurance does not cover intentional acts, criminal acts, or contractual liabilities. It also does not cover damages caused by pollution, professional mistakes, or cyberattacks.

What are the consequences of not having liability insurance?

Not having liability insurance can expose your business to financial risks, lawsuits, and penalties. You may be liable for the damages and legal fees if a third-party files a claim against your business.