When it comes to business liability insurance coverage, unfortunately, many businesses will abstain from getting the coverage, either thinking that they won’t need it at best or that it will be another costly bill that they’ll have to pay with nothing to show for it at worst. Not only is this misguided, but it can put you at serious risk of losing your business should something happen to your business that’s outside of what regular insurance would cover. For instance, should your store flood, you won’t be able to get insurance to cover it. If instead, you take out a policy in business liability insurance, then you’ll be covered for this damage immediately and will be cut a check that will cover damages as well as what you need to pay your employees.

In this post, we’re going to take a look at business liability insurance and see how it works and how you can budget for it.


What is public liability insurance?

Liability insurance basically protects a business’s assets while covering any medical costs in case you or an employee suffer an injury while on the job. If someone gets injured on the property or if there’s some kind of property damage or injury by either you or an employee, then liability insurance takes effect. Liability insurance even covers your legal costs as well as any settlement or other fees that you need to pay should you be successfully sued.

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This will include any compensatory damages that occur, and nonmonetary losses that the injured party has gone through will be covered as well. This type of liability insurance even covers cases of slander, libel, and copyright infringement.

Does my business really need public liability insurance for business?

We live in a society that is easily triggered to go litigious. Even if you think that there’s little to no chance of you facing a lawsuit, it’s still a good idea to get liability insurance.

Getting this sort of coverage is cheap compared to the thousands or even millions that you could be facing in terms of litigation. Liability insurance can either be purchased on its own or be gotten as a part of a customer’s Business Owner’s Policy. This bundles property and liability insurance into one policy. If you do have a BOP, it’s a good idea to check what your liability coverage actually is so that you know whether you should purchase more coverage or not.


How do I figure out what coverage I need?

Put simply, the level of coverage you need depends on the liability risk of your individual company. As an example, a construction contractor is going to need more coverage than a consultant or a web designer.

The location of the business is also a factor. You’ll want to check in and see how much your state awards for liability insurance.

Lastly, if you do fall into a lower category of risk, you can always get a BOP instead, which will combine property insurance and general liability into one low-cost policy that will save you money while still covering you and protecting you against just about anything that could happen to your place of business or employees.

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How does it all work?

As with many other insurance plans, your maximum coverage is going to cap out at a certain amount. This means that if you go over this amount, you’ll be facing the rest of the cost. This could end up being in the tens of thousands of dollars.

One thing that you can do instead to prevent this problem from happening is to go for excess insurance or umbrella insurance. This will cover you more broadly, and will pretty much cover just about any costs associated with a lawsuit that’s won by the plaintiff.

Above all else, do your research. You might have a situation where you need excess or umbrella insurance to work on a project with a contractor. Alternatively, the contractor might put you under the insurance for a limited time, usually for the duration of the project that you’re collaborating on.

How do I budget for this?

In an ideal world, businesses will be getting business public liability insurance right off the bat. Unfortunately, this isn’t the case, and most companies get small business public liability insurance once it becomes necessary for them. In reality, you should budget around 20 to 30 percent of your income for public liability insurance for small business. Public liability insurance for small business is not something that you want to hold off on. You’ll never know when you’ll be facing costs in relation to liability.

While this list isn’t exhaustive, it should give you an idea as to what liability insurance is and how to budget for it.

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