Liability Insurance: What Is It and Who Needs It?

by April E. Horned, CPCU, CIC

We have all heard the words “Insurance” and “Liability,” maybe even “Property and Casualty,” but what does it all mean to business owners?

Investopedia says it well: “Liability Insurance is any insurance policy that protects an individual or business from the risk that they may be sued and held legally liable for something such as malpractice, injury, or negligence.”

General Liability is the most common type of liability insurance and one of the most important coverage for any business owner. General Liability insurance provides property damage and bodily injury coverage to a third party. Within this coverage form, your entity will be protected for a multitude of occurrences. If someone slips and falls on your premises, cuts their finger or bumps their head, you have coverage. If your entity gets sued for your product failing and causing harm to a third party, you will be covered, unless it is specifically excluded. General liability insurance covers you in the event of a loss but it also covers your defense costs. We all know that lawyers are expensive. When you purchase an insurance policy, you also get a team of lawyers who are on your side.

It is extremely important to talk with a knowledgeable insurance broker whom you trust. Be honest with your broker and they can help protect your business. A knowledgeable broker knows what questions to ask and how to tailor an insurance program that fits your very specific business needs and budget. All businesses are unique and not quite the same as the guy down the street. Having a good broker/client relationship is key to any good insurance program.

April E. Horned, CPCU, CIC, is a client executive with NFP Property & Casualty Insurance Services, Inc.

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