Commercial Liability Insurance February 27, 2011
Operating a business without commercial liability insurance is like walking a tight rope without a safety net. Your company, no matter how small or big, faces risks every day. In order to protect your business, you need to have adequate commercial liability insurance. No serious business should operate without insurance. Risking paying for claims is just not good business sense. If you are starting a business of any kind, one of the first things you should do is find a commercial liability insurance policy. This is your first line of defense against liability and risk.
What is commercial general liability insurance?
General liability insurance covers a number of liability risks including property damage, bodily harm, and damages caused by incidents in the area where you conduct your business. In many instances, commercial insurance is a requirement if you want to operate within certain areas including malls, shopping complexes, etc. In essence, CGL insurance protects you and your business from being sued and from damage to your property. You need this type of insurance. If you had to pay out of your pocket for damages and claims, it could cripple your business and bankrupt you. Depending on the type of commercial liability insurance policy you choose, the coverage and premium price will vary.
Business Owner’s Policy (BOP)
A business owner’s package is the insurance package that most business owners buy. It is a package of property and general liability insurance. If your business is a new and small business, you may be eligible for low cost insurance. Many new businesses fall under the low-risk low-cost category with insurance companies. This makes you eligible for an affordable BOP package that protects you from claims of bodily harm and damage to a third party’s property caused by your company’s products or services. Because the package also contains property liability insurance, any damages to your business’ property caused by natural disasters, accidents at the work place, employee incompetence, etc, may be covered.
How commercial liability insurance protects you
Commercial liability insurance in the form of a Business Owner’s Policy can protect you, your spouse, and business partners in many ways. With a commercial liability insurance policy, any claims made by employees, customers, contractors, or any affected third party persons that your business caused bodily harm or damage to property, true or fraudulent, will be covered by the insurance policy. The policy may also pay for attorney fees to defend your business against law suits. Take the following scenarios as examples of what commercial business liability insurance can do to protect you and your business.
Scenario one: You own a plumbing business. One day you send your plumbers to work on repairs in a house. During the process of the work, your employees accidentally cut a pipe which causes major water damage to the house, ruining the dry wall, carpeting, and some furniture. The customer sues your company for the damages incurred. Commercial general liability insurance protects you if a customer claims your business caused damage to their property. The policy coverage should provide compensation for the damages as well as the loss of use of the property up to your policy’s limit.
Scenario two: You own a small factory. One day, one of your employees is injured by a malfunctioning machine. The employee consequently sues you for damages related to his or her injury. Commercial liability insurance protects you in case an employee sues you for bodily harm or death caused by your business. Even if you take all possible precautions to ensure that your company is a safe place to work in, it is impossible to prevent every conceivable accident. It is good to know that your policy will cover the medical costs, services loss, and compensation awarded to the family of the deceased in case of death.
Scenario three: You are advertising your business. One of your executives designs a campaign that is very similar to another company’s. The rival company finds out and sues you for imitating their campaign, infringing on their copyright, and/or copying their logo or advertising slogan. Your commercial business liability insurance should cover the claim and damages associated to it.
Who does commercial liability insurance protect?
Commercial liability insurance in the form of business liability, property liability, and general liability insurance policies protect you, your spouse, management, partners, and anyone who makes any decisions or transactions in a official capacity relating to your business. Your coverage also protects all your employees for consequences of actions they take in their capacity as your company’s employees.
What does a commercial liability insurance policy pay for?
A good commercial liability insurance package will cover the cost of defending your company from law suits in court. This includes attorney costs; police report fees, witness costs, court fees, etc. It may also reimburse you for a reasonable amount should you have to spend a day or more in court to defend yourself. Your commercial general liability insurance policy should pay for the settlement fees and judgments should you lose the court case.
All in all
Commercial liability insurance in the form of property, business, and general liability insurance in Business Owner’s Policies is an important part of protecting your business and managing risks. You should never operate a commercial business without basic commercial insurance. Commercial liability insurance can protect you, your family, partners, employees, and anyone acting in an official capacity for your company from damages resulting from a number of claims. If you are starting a commercial business, the first step is to bet good commercial liability insurance.