Liability Insurance—The Basics

When getting your business off the ground, few things are more important than insurance. Arguably, general liability insurance is the mother of all business insurances, but what exactly does this cover? How can a small business know which liability insurance is best for it? And how to determine what specifically meets your business’s needs? According to the Small Business Administration (SBA), “liability insurance (also known as Commercial General Business Liability) protects a company’s assets and pays for obligations—medical costs, for example—incurred if someone gets hurt on your property or when there are property damages or injuries caused by you or your employees.” This, of course, includes Worker’s Compensation, which, especially if your business is a manufacturer of goods, is not only extremely important, but illegal not to have. Liability Insurance—The Basics

Even if it’s unlikely that you’ll face a claim, reports the SBA, “getting insurance is a wise investment that doesn’t cost much—annual premiums range form $750 to $2,000, depending on your line of business and coverage needs.” If you end up having to go to court over a case and don’t have insurance, you could end up with thousands or even millions of dollars in court or settlement costs.

To determine just what type of coverage you need, you’ll need to assess your type of business and its perceived risk, according to the SBA. “For example, a building contractor will need more coverage than a web designer or consultant.” Another factor that will be considered in the type of liability insurance you need is the location of your business. This will take a bit of research to understand the types of settlements other similar business have made in liability suits in your state. According to the SBA, “if you fall into the lower risk category, you may want to consider a Business Owner’s Policy (BOP), which combines general liability and property insurance at a cost-effective rate.”

To determine which type of liability insurance is best for you, the most important first step is to contact an experienced business lawyer. Don’t go through it alone. Contact a dedicated Chicago-area business attorney today.

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