Does a liability policy cover every incident? Of course not, but you can mitigate your legal risks by making sure you have the right policies in place. Here are the most common policies that your business will need to cap your legal and financial exposure:
General Liability (GL). This is the most common type of business liability policy. GL covers injuries caused to others, damage to the property of others, and may cover personal and advertising injury coverage, such as incidents caused by libel or slander. Many of these policies include products liability, which covers defective products that might cause injury or property damage.
Employment Practices Liability (EPLI). EPLI insurance is becoming more and more necessary for employers, both large and small alike. EPLI provides protection against employee lawsuits such as discrimination, sexual harassment, failure to employ, and many others. This coverage generally does not pay for punitive damages, but instead will pay for the company’s legal costs associated with a covered lawsuit.
Errors & Omissions Coverage (E&O). Also known as malpractice insurance, E&O provides coverage to individuals and firms who provide a certain expertise and counseling to their clients. When a professional receives payment in exchange for services, they are held to a high standard by both the client and the legal system. Although incidents are not common, when they do happen they are very costly.
Directors & Officers Liability (D&O). This type of insurance is taken out to protect legal action against directors and officers of a company. Any firm that has a board of directors, such as privately held companies, non-profit organizations, and homeowners associations, need this coverage. Anyone serving on a board without this coverage is putting their own personal assets at risk. Legal action against Directors and Officers can come from competitors, government agencies, creditors, employees, stockholders, and other third parties.
Auto Liability. A business should not neglect getting Auto Liability even if they don’t own any vehicles. If an incident happens during working hours and the injured employee was using their personal vehicle for business use, the business may be named as a party to legal action on any injury or property damage that may occur. If the business is using personal vehicles on the job full time, it is probably best to have those insured under the company to make sure the company has coverage against legal action due to an automobile incident.
Specialized Insurance for Restaurants and the Food Industry. In addition to the basics mentioned above, there are many policies that pertain specifically to the food industry. For example, food spoilage coverage, food contamination, food product liability, equipment breakdown, valet coverage, crime, flood, liquor liability, and mold are just a few that are important to most restaurants. Depending on your specific business, the types of coverage you need will vary.
Each business is different, which is why it’s so important to review all potential exposures with your agent to determine if any of these exposures can be covered by insurance. A business owner truly gets a great bang for their buck when having these liability policies because as mentioned earlier, you are dealing with experts who know how to leverage their expertise most effectively.
These types of insurance policies also bring more certainty to your business, the premium is all you pay, you have no worries of losing your business or facing significant setbacks due to spending tens or hundreds of thousands of dollars defending and paying claims that most people have no idea how to handle.