a business desk with an insurance binder for the company to research whether they need liability insurance or not

Do You Need Liability Insurance?

If someone came into your business and fell, would you have insurance to cover any injuries? What if there was a lawsuit? These are terrifying questions for any business owner, but you might be able to breathe easier if you had liability insurance. 

What is liability insurance?

In general, liability insurance is part of a general insurance system that helps mitigate risk for a business owner. Not every liability insurance plan is the same, and there are several different types of liability insurance. Some policies provide general coverage against bodily injury, and other kinds are supplemental for those with specialized skills—like a doctor or accountant who may need unique coverage.

Many business owners choose to purchase liability insurance because they would rather be covered in case someone was to get hurt in their store. Should this ever happen, it could be the owner’s responsibility to cover any medical bills and damages that arose from the injury. This can cost thousands of dollars, but liability insurance picks up the bill like car insurance would if someone got in a car accident. Most business owners find it better to be safe than sorry.

Do you need liability insurance?

It isn’t uncommon for business owners to ask this question, but the answer isn’t cut-and-dry. The answer depends on the type of business you own and a few other factors. You can ask yourself: what harm could your product or service cause? Liability insurance could be in your best interest if you find an answer.

Should someone be harmed, do you have the ability to cover any damages? Liability insurance may not be necessary if your company has the capacity to pay for bodily damages, medical costs, and possible lawsuit fees that could occur if someone gets hurt. 

What coverage applies to your situation?

There’s insurance for everything, so purchasing the first liability insurance you find may not cover you in the event of damages. Business owners should go over their situation to discover what type of insurance they should purchase. 

For example, some companies choose to pay for business liability insurance, which covers much more than average general liability policies. Rather than just bodily injury and product damage, business liability can also protect you against loss involving reasonable force, borrowed equipment, non-owned vehicle coverage, legal defense costs, and advertising injuries such as slander or libel. 

Alternatively, a doctor or accountant may need professional liability insurance. This is a special type of insurance that protects individuals of a particular skillset who may experience lawsuits that commercial businesses may not. Professional liability insurance can go by different names, such as malpractice insurance or error and omissions insurance, but it's created to supplement general liability. It’s very common to purchase professional liability insurance for those who work in the medical field, financial services, or maintenance. 

In short, every business owner should consider if they are protected against loss if someone hurts themselves or attempts to sue them for injuries. Regardless of their size, companies can always benefit from liability insurance because it’s impossible to predict the future, and protecting against loss can avoid future disasters. 

Last Updated: December 12, 2018