Liability Insurance: The Facts You Need to Know to Avoid Any Risk

Liability Insurance: The Facts You Need to Know to Avoid Any Risk

As a business owner, you face many financial risks. Fortunately, you can mitigate many of those risks through insurance. Learn about a few different types of liability insurance before conducting additional research about which types are right for you.

General Liability Insurance

General liability insurance covers legal fees, settlements, judgments, damage to property and medical expenses. The insurance company typically provides a lawyer to guide you through a lawsuit and covers legal, court and witness fees. However, intentional criminal acts such as fraud, theft or vandalism are not covered by insurance. Also, you need to purchase other types of liability insurance along with general liability. Plus, you want to annually review your general liability coverage to ensure your risks are covered, especially if you purchased property, vehicles or other large assets during the year.

Commercial General Liability Insurance

As long as a covered incident takes place during work hours or while acting on your company’s behalf, commercial general liability insurance typically will cover your business as an entity and each employee. Commercial general liability insurance provides defense and indemnity coverage against claims for bodily injury and property damage.

Errors and Omissions Insurance

To protect against loss or damage arising from poor or misleading advice, or an act of negligence that leads to a client’s financial loss, you may want to purchase errors and omissions insurance. Coverage is written on a claims-made basis. Because the events leading up to a claim can be spread over a long time, a claim is covered if it occurs during the time the policy is in force. Claims arising from events prior to the retroactive date are not covered. Also, if coverage is terminated, future claims will not be covered even if they happened due to events that occurred while the policy was in force.

Cyber Liability Insurance

To address the increasing risks and exposures confronted by operating online, you may want to purchase cyber liability insurance. This is especially important if you operate a website, conduct online transactions or store personally identifiable information on your customers and employees. Even if you hire a third party to protect the information, you are liable for any security breach of your network. Your cyber liability policy may contain one or more coverages for security and privacy liability, privacy regulatory defense and penalties, cyber terrorism and cyber extortion, or multimedia liability. Your policy also may cover network asset protection, privacy breach response costs or customer notification and support and credit monitoring expense. Plus, cyber liability may cover business interruption if a virus causes your computer system to go down or defense coverage if you inadvertently transmit a virus to a third party.

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