Sunday, April 19, 2009

Business Liability Insurance Protects You

Liability Insurance Protects You Against

Business Liability Insurance Protects You

For many small business owners, entrepreneurs, and sole proprietors, the decision of how to organize their business is based on protecting their personal assets and keeping them separate from the business. For some businesses, incorporating offers the first layer of protection. However, when the owner of the corporation is involved in the daily operations of the business, courts may lift the corporate veil of protection and find the owner personally responsible for the company’s legal liabilities.

Many business owners have found that business liability insurance offers protection for the various situations that may arise. Any individual providing an opinion, making recommendations, designing solutions or offering a service can transfer some of the risk associated with those activities with a liability policy. Four types of liability coverage make up the majority of business liability policies:

1. Professional Liability Insurance, also known as Errors and Omissions

2. Workers' Compensation Insurance

3. Business Liability Insurance Package Policy

4. Umbrella Liability Insurance

Professional Liability insurance or errors and omissions insurance (E&O) protects the company and owner in the event a client accuses you of causing a financial loss as a result of an error or an omission committed in the delivery of professional services.

Most states require employers to carry workers’ compensation insurance. This coverage provides medical and disability benefits to employees in the event of a work related injury or illness. Workers' compensation policies contain an employers' liability portion that protects the organization in the event an employee files suit claiming the company's negligence caused a work related illness or injury.

General business liability insurance protects a company in the event a client is injured on the company’s premises, an employee injures someone, or an employee damages property at a client's location. General liability coverage on a business liability insurance policy also meets a business that rents or leases property’s landlord's requirement for business premises liability insurance. General liability insurance is often also referred to as a business owner’s policy.

Umbrella liability policies provide coverage for claims that exceed the amount of coverage on your other liability policies. These policies include general liability, commercial auto coverage and the employers' liability coverage on your workers' compensation policy. Umbrella business liability insurance coverage is triggered when claims exceed the underlying primary insurance.