How Liability Insurance Protects You Against Pain and Loss in Your Business
Risk and potential loss is everywhere. What liability insurance protects you against is the potential for business ending claims – and lots of pain. It’s like a life preserver no business should be without.
Liability insurance protects you against the risk of liabilities resulting from lawsuits and similar claims from third party persons or organizations attributing an injury to your business. Injury can be physical, financial, emotional or a combination of all three.
Many dedicated carriers provide liability insurance through trusted brokers like KMRD Partners. As such, carriers offer protection to insureds against specified perils. Because liability insurance provides you against third party insurance claims, payment is typically made to the injured third party entity not party to the insurance contract between the carrier and the insured.
Want to shield yourself from liability in your business? Send us an email or contact us below and we’ll review your existing insurance policies.
Damage caused intentionally and contractual liability are not generally covered by liability insurance. When a legitimate claim is made, the carrier is obligated to defend the insured. The legal costs of a defense normally do not affect policy limits unless the policy expressly states otherwise.
The liability insurance policy will cover the insured’s legal costs, as well as the judgment or settlement amount. Because the cost of defending a claim might exceed the amount being claimed, the defense portion of a liability policy can at times have greater value than the insurance.
Below are a few common types of liability insurance to protect your business.
General Liability Insurance
General liability insurance coverage transfers risk for a business from claims arising from bodily injuries or property damage occur. A customer slipping on a wet floor is a common covered accident. Another example is when an employee unintentionally damages a customer’s property, in which the coverage will assume responsibility for the cost of repairs.
Employer’s Liability Insurance
Employer’s liability insurance protects you against against liabilities arising from injury or death of an employee. This type of coverage is compulsory in all states for employers.
Product Liability Insurance
Product liability insurance protects you against lawsuits arising from injury or death or property damage caused by products manufactured for sale by the insured.
Indemnity insurance coverage transfers risk for businesses against negligence claims due to financial harm resulting from mistakes or failure to perform. Errors and omissions (E&O) coverage is a form of indemnity coverage purchased by professional services firms, including insurance, accounting, mortgage lending and law firms. Increasingly, businesses from outside the professional services sector are also purchasing E&O insurance. These businesses include contractors, consultants and maintenance professionals who carry indemnity insurance because of their exposure to “failure to perform” claims.
Directors and Officers Insurance
Directors and officers insurance coverage transfers risks to insurance for the activities and actions of a Board of Directors or officers. This coverage protects these individuals in the event an employee, client, supplier, beneficiary or other individual or group sues the organization and the D&Os for common law failures of management, control, loyalty, etc. While a corporation by definition offers some amount of personal protection against liability to directors and officers, many companies choose to offer additional protection to key members of the executive team.
Umbrella insurance coverage protects individuals and businesses against catastrophic losses when the liability limits of underlying insurance coverages have been reached. Read our in-depth post to learn more about commercial umbrella insurance for your business.
How KMRD Can Help:
KMRD delivers risk management and human capital solutions to over 600 clients nationwide. Our award-winning team, disciplined approach, proven processes, combined with our risk management portal make KMRD the leading choice to improve business protection and reduce the overall cost of risk.