Owning and operating a business comes with plenty of responsibility. You can be personally liable if you have signed a personal guarantee for a loan, if you personally have injured someone, if you have acted in an irresponsible or illegal manner, or if you do not operate your business as a separate entity. Business liability insurance protects your business in the event of a lawsuit for personal injury or property damages. It will usually cover the damages from a lawsuit along with the legal costs.
General liability insurance is the main coverage to protect your business from injury claims, property damages, and advertising claims. General liability insurance is also known as Commercial General Liability (CGL) and covers five basic categories of business liability:
1. Bodily Injury - physical harm to a person at your place of business, or an injury caused by your employee at a client's site.
Employers have a legal responsibility to their employees to make sure that the workplace is safe. If you are injured or become ill due to your job, you have a right to benefits under a system called “Workers Compensation”. Workers Compensation is a type of insurance that all Massachusetts employers are required to have for their employees. It protects employers from lawsuits that result from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents. Workers compensation insurance covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses. This coverage provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitation services. It also provides death benefits to surviving spouses and dependents. Workers compensation insurance must be bought as a separate policy. Although in-home business and business owners policies are sold as package policies, they do not include coverage for workers' injuries.
Errors and omissions insurance protects your business against malpractice, errors, negligence and omissions. The cost of errors and omissions, also known as professional liability or malpractice insurance, depends on a number of factors: the inherent risk of the kind of work you do, the rating category your work is placed in, the number of claims filed in your industry, and the state you live in. Coverage includes legal defense costs and will pay for any resulting judgments against you, including court costs, up to the coverage limits on your policy.
Professional liability insurance is a specialty coverage. Professional liability coverage is not provided under homeowner’s endorsements, in-home business policies or business owners policies. Professionals that operate their own businesses need professional liability insurance in addition to an in-home business or business owner’s policy. This protects them against financial losses from lawsuits filed against them by their clients. You should protect your practice, your staff and yourself with this specialty coverage.
Employment Practices Liability Insurance is a new form of liability insurance. It provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. Standard commercial liability insurance generally doesn't cover this area. While the number of lawsuits in the areas of harassment, discrimination, and wrongful termination suits are on the rise, with specialized representation, claims can be defended with efficiency and insurance can be offered to businesses while retaining a profit. If you ever face one of these situations, the legal financial aspect can be devastating.