Business insurance is a form of risk management used to protect you and your company from financial loss in the event of an accident or crisis. According to Rorie Devine, CTO at Gro. Team, it’s vital for businesses to apply for insurance because it will help cover the costs associated with property damage and liability claims.
Protecting your business against liability
Some of the most essential business insurance types protect you from liability. The type of liability insurance you need will depend on your business and the services you provide.
Let’s explore some popular types of liability insurance.
#1 General liability insurance
General liability insurance, also known as business or commercial liability insurance, is essential coverage for various claims, including bodily injury, property damage, personal or advertising injury, medical payments, products-completed operations, and damages to premises rented to you.
#2 Business owners policy (BOP)
If you want general liability insurance and property coverage, you can package them together in a business owners insurance policy, also known as a BOP. A BOP provides liability coverage for customer injury, property damage, and product-related claims, in addition to commercial building and movable property coverage.
#3 Employment practices liability insurance (EPLI)
Small businesses with employees often benefit from employment practices liability insurance. This insurance type protects you if an employee files a claim against you for wrongful discipline or termination, sexual harassment, discrimination, negligent evaluation, breach of employment contract, mismanagement of employee benefits, or wrongful infliction of emotional distress.
#4 Professional liability insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects businesses that offer professional services. B2C businesses often use E&O coverage to protect against claims stating their services caused clients financial distress or bodily injury.
#5 Contractors professional liability insurance
If your business is in the design-build or construction management industry, you are required to purchase some form of contractors’ professional liability insurance. This coverage protects professionals against construction errors or losses incurred when designing, engineering and constructing a building.
#6 Directors and officers (D&O) liability insurance
If your business has a corporate board of directors or advisory committee, you want D&O insurance. This insurance protects your directors’ and officers’ assets if they are personally sued for wrongful acts in company management (e.g., failure to comply with workplace laws, fraud, theft of intellectual property, misrepresentation of company assets, or misuse of company funds).
#7 Management liability insurance
Management liability insurance is a combination of coverages used to protect private, public and nonprofit companies for various board-level exposures. It protects against the risks of managing a business and is purchased by organizations with a board of directors. A typical management liability insurance package includes coverage for employment practices liability, fiduciary liability and D&O liability.
#8 Product liability insurance
Product liability insurance provides more protection and security than a standard product warranty or guarantee. This coverage protects your business if a product causes damage or injury to a third party, or if your business faces a product-related lawsuit. For example, if your product had a lithium battery that caught on fire, injuring the consumer, they could sue you. Product liability insurance covers you in this instance.