Liability insurance protects you against things you cannot predict, like if someone falls and sues you for bodily injury. While some policies are created to give you umbrella coverage, others provide supplemental insurance. Here are the different types of liability insurance explained so you know which can keep you safe from lawsuits.
Commercial Liability Insurance
Commercial liability insurance is often referred to as general liability insurance. It’s the most basic type of coverage a business can get to protect themselves against bodily injury and property damage lawsuits. These policies could also cover products-completed operations liability protection; meaning, if a product is hazardous, the commercial liability insurance could pay for any damages brought by a customer or client.
Business Liability Insurance
Some business owners opt for business liability insurance because it often covers more than commercial liability insurance. Business liability insurance provides a policy for:
- Bodily injury
- Property damage
- Products-completed operations liability protection
- Reasonable use of force
- Borrowed equipment
- Non-owned vehicle coverage
- Legal defense costs
- Advertising injuries such as slander or libel
- Medical payments
As you can see, this insurance can be more valuable, but it can also be more expensive than commercial liability insurance. The monthly premium can be very high if you work in a hazardous field. Someone who owns a business in accounting may have a lower monthly cost than someone who works in landscaping.
Professional Liability Insurance
General liability policies may not provide enough protection for professionals who have a specialized skill set such as a doctor, accountant, lawyer, maintenance worker, or financial consultant. General liability can have gaps when a client attempts to sue for alleged or actual negligence, defense costs, personal injury in the form of libel or slander, and copyright infringement.
By purchasing professional liability insurance, these individuals gain supplemental protection against lawsuits of this nature. Remember that this is supplemental insurance, and it doesn’t cover things that general liability policies would cover, such as bodily injury or property damage.
Worker’s Compensation Insurance
When an employee injures themselves at work, they may require compensation to fix the issue. Worker’s compensation insurance is a type of liability insurance that covers any costs the employee may have after an injury at work. Most states in America require businesses to purchase worker’s compensation to pay for an employee’s medical bills, recovery costs, and partially missed wages in the event of an accident.
Employee Liability Insurance
While many people know about worker’s compensation insurance, they may not know it’s only the first part of the policy. The second part is employee liability insurance, which businesses are also required to purchase. Even though this insurance isn't optional, employee liability insurance is supplemental and covers liability arising out of an employee's work-related injury that isn’t included in worker’s compensation—specifically lawsuits.
For example, if someone trips over a wire and breaks their leg, they may receive worker’s compensation. However, the payment may not cover all of the medical bills, and the employee may sue the business for the remaining balance. Employee liability insurance will cover the additional cost, so there’s no out-of-pocket loss for the company.
