Small business owners often become overwhelmed by the legal and financial responsibilities of running a business. Property costs, licenses, and taxes can quickly add up, leaving business owners with a small amount of profit. Because of these expenses, many small business owners opt out of liability insurance coverage. Getting liability coverage can protect small business owners if legal action is taken against them. If they aren’t sure what they need in terms of business insurance, San Diego business owners should contact their insurance agents to make sure they have the coverage necessary to protect their interests.
What Liability Insurance Covers
Liability insurance typically refers to professional liability or general liability insurance policies. Professional liability insurance helps business owners recover costs incurred if errors or omissions are made in the services or goods the business produces. For example, a furniture-making business may have accidentally taken an order down incorrectly and delivered the wrong types of chairs to the client. Professional liability insurance can cover the cost of producing the correct chairs.
General liability insurance covers claims for false advertising, property damage, and personal injury. For example, a shopper may slip on a recently mopped floor where no caution signs are posted. General liability insurance covers the cost of the slip-and-fall claim.
Types of Businesses that Need Liability Insurance
Any business that produces or sells goods and services should purchase both general and professional liability insurance. This is especially important because in recent years, liability claims have increased in the United States. In 2016, $429 billion in liability claims were awarded in the United States. A large claim made against a small business owner may be enough to shut a business down.
Signed Waivers & the Need for Liability Insurance
Many small business owners mistakenly believe if they have their customers sign waivers, they’re legally protected and don’t need liability insurance. For example, an owner of a trampoline park may believe the waivers customers sign means customers cannot sue him or her in case an accident occurs while customers are jumping on the trampolines.
This belief is false. While a waiver may be designed to push responsibility onto the client rather than the business owner, a claim may still be filed. If gross negligence is found to have occurred, a judge may award damages to the injured party.
How Much Insurance a Small Business Needs
While small businesses need to make sure they’re well covered, paying too much for insurance can quickly eat into profits. Getting the right amount of coverage is essential. Legal minimums vary from state to state. An insurance agent or state commissioner will be able to answer questions about the legal amount of liability insurance required according to your type of business.
Next, assess the value of the property and make sure the amount of insurance covers all the costs of the property, vehicles, and tools. An incorporated business may only be sued for the costs of the property, while a sole proprietor may be sued for his or her personal assets. Finally, look at the employees. Highly skilled professional employees typically make fewer mistakes than entry-level employees. Taking into account all three of these factors can help a small business owner purchase the correct amount of liability insurance coverage.
If you’re a small business owner, make sure to protect your business by purchasing the right insurance coverage. For affordable, reliable business insurance as well as homeowners, renters, motorcycle, and auto insurance, San Diego residents call on the trustworthy professionals at Altra Insurance Services. Reach out to us today at 619-474-6666 to learn how we can satisfy all your insurance needs.