Small businesses play a crucial part in the economy, often facing unique challenges and risks.
One of the biggest aspects of protecting your small business is securing the right kind of liability coverage.
General liability insurance provides crucial financial protection against third-party claims for various types of injuries or accidents. But insurance policies can vary greatly from provider to provider, so smaller companies must carefully consider their needs when selecting a policy.
Here are a few examples of what small businesses should keep an eye out for in their general liability coverage:
Adequate Coverage Limits
The first thing to consider is the coverage limits and if they are sufficient to properly protect the business. The coverage limit reflects the max total amount the insurance provider will cover for claims.
Small businesses should assess their potential liability risks and choose coverage limits that align with their specific needs. It’s important to remember that a single lawsuit or claim can quickly surpass low coverage limits, leaving your business exposed to significant financial loss.
Comprehensive Coverage Details
General liability insurance should offer comprehensive coverage that guards against a variety of issues. On top of property damage/bodily injury, it should include protection for advertising/ personal injury.
This protects against claims of libel, slander, false advertising, or copyright infringement. You need to carefully examine the coverage to make certain it encompasses the various risks relevant to your operations.
Additional Insured Endorsement
Small businesses often collaborate with other entities, such as contractors, clients, or vendors. In such cases, it is crucial to have an additional insured endorsement in the general liability policy. This endorsement extends coverage to the additional party, protecting both the business and the collaborating partner in case of a liability claim.
Defense Costs Coverage
Legal fees can be expensive, even if a claim is baseless. The policy should explicitly cover defense fees, such as court costs, lawyer fees, and settlements. Without adequate defense cost coverage, you might have to bear these fees yourself, which can be financially crippling.
Including defense cost coverage in the policy means the insurance company bears these burdens and helps protect your business’s financial stability.
Exclusions and Limitations
Every insurance policy has exclusions and limitations, which outline specific situations or risks that are not covered. You should carefully review these exclusions to understand potential gaps in coverage.
For example, some plans may exclude protection for certain risky professional services or dangerous activities. It is essential to make sure that the policy aligns with the nature of your business operations and that there are no significant gaps in coverage.
Don’t Settle for Inadequate General Liability Insurance
Small businesses must approach liability insurance with careful consideration. By evaluating the coverage details of various policies, you can select insurance that provides the necessary protection.
Investing time in understanding the policy’s terms and consulting with insurance professionals can help you make informed decisions and mitigate potential risks. By securing the proper coverage, your business can focus on providing the best service or product possible for your customers.
