Small business owners like you want to protect what they’ve worked hard to build. However, budget constraints and limited time may make it feel like you have to choose between different insurance policies or settle for the first decent option you find.
That doesn’t have to be the case. It’s possible to get cost-effective, comprehensive coverage from a qualified provider. You only need to know where to start.
First, it’s essential to learn how different types of insurance can benefit business so you can decide if they should be included in your coverage. That’s why, in this article, we dig into the pros and cons of liability insurance policies for small businesses.
Liability refers to your responsibility to other people within the context of your business. As a small business owner, you’re liable for the safety and property of any third parties you work with and the safety of your employees.
With a liability insurance policy for small businesses, you can protect your assets from having to cover those unexpected expenses. Here are a few common types of liability insurance policies for small businesses.
While insurance can cover a lot of the costs associated with third-party injury, property damage, and service dissatisfaction, there are some standard insurance exclusions that small business owners should consider, including:
Most of these exclusions can be covered by separate insurance policies. Your insurance provider may also be able to tailor your liability policy to include coverages that are typically excluded.
“When embarking on an entrepreneurial journey, new founders must prioritize obtaining appropriate insurance coverage for their businesses. Starting a business involves risks, both known and unknown. Insurance acts as a safety net.”
- Abhijeet Kaldate, Founder of Astra WordPress Theme
When it comes to insurance options, a liability insurance policy for small businesses has a lot of perks! They range from personalization to scalability and asset protection.
You may have noticed already that there are many policy options. This makes it easier for small business owners to pick and choose the policies they need and leave the ones they don’t.
For example, it would be wise for a lawn care business owner to add a pollution liability policy into their coverage plan if they lay pesticides down. On the other hand, an art gallery owner who has wine tastings once a month does not need a pollution liability policy — but it would be helpful to get liquor liability coverage added to their insurance plan.
It isn’t just the policy options that are customizable. Everyone’s going to need a different coverage limit based on their risks. Contributing factors to how high your coverage limit is will include how many employees you have, how much equipment you have, the value of any property you service, and your annual income.
The more expensive your risks are, the more you could be liable for, and the higher your coverage limit should be.
No matter your policy and coverage limit needs, all small business owners benefit from liability insurance by protecting their assets. The last thing any business owner wants is to pay unexpected fees out of pocket. Liability insurance protects you from spending your hard-earned money on accidents.
The Downsides of Liability Insurance
While liability insurance is a solid coverage option, there are some considerations small business owners should take into account when deciding if it’s right for them.
The cost of liability insurance typically increases in proportion to how risky your work is. For example, if you’re a roofer who only works on one-story homes, your likelihood of lawsuits is much lower than a roofer who works on ten-story buildings.
The greater your exposure to potential lawsuits, the higher the liability insurance cost. When deciding whether or not to buy liability insurance, it can be helpful to do a cost-benefit analysis.
For example, is your yearly revenue high enough to justify the cost of insurance? Is your exposure to risk significant enough to justify the need for insurance? These are some considerations to remember as you decide whether or not liability insurance is right for you.
Your policy may not be accurately written if you don’t have a good insurance partner. This isn’t a downside of liability insurance as much as it is something to watch out for when buying an insurance policy.
Partnering with a qualified insurance provider who understands your coverage needs and can write a policy that will hold up in the face of claims is crucial to future success. When you work with experienced insurance brokers at a company like CoverHound, you can feel confident you’re in capable hands.
General and Professional Liability insurance policies are a customizable part of your insurance. They can be tailored to your budget and specific needs while providing adequate coverage – not to mention peace of mind.
With CoverHound’s fast quoting tool, you can find policy options from A-rated providers and manage your policies in one place. We simplify insurance so that you can get back to doing what you do best.
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