Small Business Insurance Protects Sued for Lawsuits and Errors

Small business insurance protects your company from being sued for lawsuits and errors.

A lawsuit can be devastating to a small business, with the average cost of a lawsuit ranging from $50,000 to $500,000 or more.

Having the right insurance coverage can help mitigate these costs and protect your business's assets.

Liability insurance, for example, can help cover the costs of a lawsuit, including court fees and settlements.

General liability insurance covers some types of lawsuits, but not others, so you may still need special coverage for certain types of lawsuits.

Coverage is based on the types of damage alleged, and if it's an excluded issue, you aren't covered. You'll need special coverage for certain types of lawsuits, like professional errors or employee injuries.

Some policies may cover you for general lawsuits, but it's essential to review your policy to understand what's included and excluded. The right answer will vary from policy to policy, so don't assume you're covered just because you have general liability insurance.

Having general business liability insurance is a necessity, not a luxury. It can protect your business from lawsuits and costly settlements, says Loretta Worters, a spokeswoman for the Insurance Information Institute. If you don't have it, a lawsuit could ruin your business.

Business owners should consider having general liability insurance, even if they have a limited liability company (LLC). This type of insurance can provide additional protection, according to Alyssa Gregory, of About.com's small business guide. The potential liability depends on the business, and the cost of insurance usually depends on the risk and assets of the business.

It's easy to work general liability insurance into your business budget. The cost is not as expensive as people think, and it's worth it to protect your business.

Protecting your business from lawsuits can be a daunting task, but having general business liability insurance can be a game-changer.

General liability insurance can protect your business from things that happen during the course of business, such as a customer getting hurt using a product or a disaster occurring. This type of insurance covers the business and the business owner from any claims that involve bodily injury or property damage.

It's not just about the size of your business, either - small business owners may not think they need this type of insurance, but it can be a necessity. As Loretta Worters of the Insurance Information Institute says, "If you don't have this it could ruin the business."

General liability insurance typically doesn't cover employee injuries, professional mistakes, and auto-related incidents, but there are other forms of liability insurance that can cover those specific things. For example, there's product liability insurance, professional liability insurance, commercial property insurance, and home-based business insurance.

The type of business you have and the location you're in can also play a role in determining whether you need general liability insurance. As Alyssa Gregory of About.com's small business guide says, "It depends on a number of things, where you're located, type of business, the kind of product you're selling and how the business is structured."

Liability insurance is not a requirement for many businesses, but it's something business owners should consider having. It's not as expensive as people think, and it's easy to work into the budget. As Gregory says, "It's not like it's so expensive its going to break the business."

It pays to shop around for general liability insurance, too - insurance experts say to get at least three quotes and compare what each package covers.

Protecting your business's data is crucial, and it starts with using strong and unique passwords for all accounts, including email and social media, as seen in the "Password Management" section.

Using two-factor authentication adds an extra layer of security, requiring a second form of verification, like a code sent to your phone, to access sensitive information.

Regular backups are essential, and it's recommended to store them offsite, such as in the cloud, to prevent data loss in case of a disaster or cyber attack.

Limiting access to sensitive data to only those who need it is key, and implementing role-based access control can help achieve this.

Encrypting data, especially when transmitting it over the internet, is a must, and using HTTPS connections can ensure this.

Monitoring your business's network and systems for suspicious activity is vital, and using intrusion detection systems can help identify potential threats.

When you're a small business owner, it's essential to have the right insurance to protect yourself from unexpected lawsuits. General liability insurance can protect your business from bodily harm to others, property damage, and personal injury.

You can obtain quotes for general liability insurance from multiple providers through World Insurance Associates, who have independent agents with the expertise to help you choose the best policy.

There are several types of insurance policies that can provide protection for your business. Here are some of the most common ones:

Malpractice insurance is a must-have for most licensed professionals who want to protect themselves from lawsuits related to professional mistakes.

Professional mistakes, such as malpractice, are not covered by general liability insurance. You'll need a separate policy to cover these types of lawsuits.

Workers' compensation insurance covers employee expenses when they're injured on the job, but it may not be enough to prevent a separate lawsuit. This is why you may need additional coverage for employee injuries.

Employment discrimination, including harassment and wrongful termination, is not covered by general liability insurance. You'll need employment practices liability insurance to protect yourself from these types of lawsuits.

Directors and officers liability is a separate coverage area that protects individual directors and officers from lawsuits related to various types of damage, including bodily injury, property damage, and poor business decisions.

Here are some examples of the types of damage covered by directors and officers liability:

There are several types of insurance that a business can purchase to protect itself from various risks. General liability insurance, for example, protects against bodily harm to others, property damage, and personal injury.

Commercial property insurance, on the other hand, protects against damage to the property that you have bought or rented for your business. This type of insurance is essential for businesses that own or rent a physical space.

Business income insurance protects against the loss of business income. This can be due to a variety of reasons such as a natural disaster, fire, or other unforeseen events that can disrupt business operations.

Professional liability insurance protects against errors that your business has made in the products/services it sells. This type of insurance is crucial for businesses that provide services or sell products that can have a direct impact on customers' lives.

Data breach insurance protects against damages caused by data breaches/cyber attacks. With the increasing reliance on technology, this type of insurance has become more relevant than ever.

Here are some common types of business insurance:

Hired and non-owned vehicle coverage is a type of insurance that protects business owners from liability lawsuits over accidents in rented, leased, and personal vehicles used for business purposes.

This coverage is especially important for small business owners who have employees who use their own vehicles for work, as personal car insurance policies generally don't cover vehicles when they're being used for business purposes.

Hired and non-owned auto insurance covers bodily injury liability and property damage liability, which means it would pay for your legal fees in the event of a lawsuit.

If you're using a leased service van or another type of vehicle for business, having hired and non-owned auto insurance can also provide protection against damage to the vehicle itself.

The cost of hired and non-owned auto insurance varies depending on the number and type of vehicles you have, your employees' driving records, and your coverage limits.

Here are some examples of situations where hired and non-owned auto insurance would be beneficial:

In both of these scenarios, hired and non-owned auto insurance would pay for the business owner's legal defense and court-ordered judgment.

Small business owners put their personal finances at risk in the event of a business-related lawsuit. This is especially true for partnerships and sole proprietorships, which can be exposed to exorbitant expenses.

Business liability insurance protects a company's assets and pays for legal obligations, such as medical costs incurred by a customer who gets hurt on store property.

For businesses that rent commercial real estate, general liability insurance protects against liability from physical catastrophes like fire, mold, floods, or other damage.

Business liability insurance also covers claims of false or misleading advertising, including libel, slander, and copyright infringement.

Cyber insurance can be a lifesaver for businesses, especially when it comes to financial losses from cyber breaches. Your company could face a cyber liability lawsuit if a client gets hit with a massive cyber breach after you've audited their network security system. First-party cyber liability insurance can pay for costs like public relations and damage control. This type of insurance is crucial for businesses that handle sensitive customer data. If your company's employees' Social Security numbers are stolen, first-party cyber liability insurance can cover the cost of data recovery services.

Business liability insurance is a must-have for small business owners, especially those who are sole proprietors or partners, as it protects their personal finances from business-related lawsuits. These types of lawsuits can be devastating, leaving business owners with exorbitant expenses.

A limited liability corporation (LLC) may seem like a safe haven, but even its owners can still be exposed to personal risk. Business liability insurance pays for legal obligations, such as medical costs incurred by customers or on-the-job injuries sustained by employees.

Businesses with higher risks, like construction companies, can augment their coverage limits with excess of loss reinsurance or umbrella insurance. This provides an extra layer of protection against unexpected costs.

Liability insurance also covers the cost of a company's legal defense, as well as any settlement offerings or awards a company is mandated to pay. These costs can include compensatory damages, non-monetary losses, and punitive damages.

Businesses that rent commercial real estate property should consider general liability insurance to protect against liability from physical catastrophes like fires, floods, or mold damage.

Here are the three main types of business liability insurance:

Coverage costs are determined by a business' perceived risk levels. For example, a building contractor with heavy equipment will pay more for coverage than an accountant who works behind a desk.

General liability insurance can cover lawsuits over bodily injuries, property damage, copyright infringement, and defamation, such as libel or slander. This type of insurance is pretty affordable for most small businesses, with IT businesses paying an average of $42 per month.

A general liability policy can protect your business from liability lawsuits, including slip-and-fall accidents, slander claims, libel claims, and false advertising claims. These policies typically cover minor suits, catastrophic suits, and class-action suits, as long as the material of the suit falls within the policy's terms and conditions.

Here are some common types of lawsuits that small businesses face, along with examples of how business lawsuit insurance coverage can protect your bottom line:

Employment practices liability insurance (EPLI) can protect your business from lawsuits related to harassment, discrimination, or other violations of employee rights. This type of insurance can cover claims of discrimination, wrongful termination, mismanagement of benefits, breach of employment contract, and privacy invasion.

Employment practices liability insurance is a must-have for businesses with employees. It covers lawsuits from employees related to harassment, discrimination, or other violations of employee rights.

The average tech company pays $222 per month for this coverage, making it a smart investment for any business with several employees.

An EPLI policy must be active when the incident took place and when the lawsuit was filed, as it's typically sold as a claims-made policy.

EPLI doesn't cover employee injuries, which are covered by workers' compensation insurance.

Here are some scenarios where EPLI would protect your business:

The types of claims EPLI covers include:

Directors and officers insurance is a must-have for any business. It protects your board members and corporate officers from lawsuits related to decisions they make on behalf of the company.

D&O insurance covers common lawsuits regarding employment practices, mismanaged funds, failure to follow corporate bylaws, failure to comply with industry regulations, and intellectual property infringement or libel. These are just a few examples of the many potential risks your board members and officers face.

The average cost of D&O insurance is $138 per month. However, the cost varies based on the size and makeup of your board of directors.

Here are some examples of liability claims that D&O insurance would cover:

D&O insurance ensures executives won't have to pay legal fees out-of-pocket.

Errors and omissions insurance is a type of policy that protects businesses from lawsuits related to mistakes, negligence, or professional oversights. It's also known as professional liability insurance.

This policy covers things like work errors, undelivered services, incomplete work, missed deadlines, budget overruns, breach of contract, and accusations of negligence. Any small business that provides services or expert advice should consider an E&O insurance policy.

The average cost of this policy is $61 per month for TechInsurance customers. However, your business may pay more or less depending on your profession, how many employees you have, and the deductible and policy limits you choose.

A few situations in which E&O insurance would protect your business include a designer at your web development company delivering a website late, a client suing your IT consulting company for negligence after a database migration, or a web hosting business suffering a DDoS attack and being sued by a customer for lost revenue.

Here are some examples of how E&O insurance can cover mistakes:

As a business owner, one of the biggest risks you face is being held personally liable for business debts. This means that if your business is sued or has outstanding debts, your personal assets, such as your home and savings, can be at risk.

A sole proprietorship, which is typically one individual running a business, offers no protection against personal liability. In fact, a sole proprietor is personally liable for the debts of the company.

This lack of protection can be devastating, especially if you've invested your life savings into your business. If you're sued, you could lose your home, your car, and even your retirement savings.

Insurance can help mitigate this risk, but it's not a guarantee. For example, commercial general liability insurance can provide some protection against lawsuits, but it's not a substitute for proper business planning.

Here are some key facts to keep in mind:

It's essential to understand the risks and take steps to protect yourself. If you're considering starting a business, it's worth exploring alternative business structures, such as an LLC, which can provide greater protection against personal liability.

General liability insurance is a must-have for small businesses, especially those with a public storefront like a computer repair shop. It covers the cost of lawsuits brought by people outside your company, including bodily injuries, property damage, copyright infringement, and defamation.

For IT businesses, general liability insurance is surprisingly affordable, with an average cost of $42 per month. This type of insurance is often required in client contracts, office leases, and mortgages.

A business owner's policy (BOP) is a great option to consider, as it bundles general liability coverage with commercial property insurance and provides protection from a range of liability and property risks.

If you're a web design company, you know how easy it is to have a customer spill coffee on their equipment. General liability coverage would pay for your legal costs and the new computer and monitor in such a scenario.

Here are some examples of customer interactions that can lead to a lawsuit:

To find the right general liability insurance for your business, consider contacting World Insurance Associates. Their independent agents can obtain quotes for policies from multiple insurance providers and help you determine which policy offers the most robust protections.