Whether you’re a consultant, a retail business owner, or a skilled trades contractor, having the right insurance coverage is an essential part of protecting your small business from costly lawsuits. Lawsuits can not only affect your bottom line, but may also damage your reputation with existing clients and prospective customers. Understanding the risks your business faces and having the right coverage for those risks is an important step in keeping your business running smoothly.
What the heck is liability?
Liability refers to your small business being held legally responsible for damages to a third party. When you decide to run your own business, you become exposed to a variety of liability risks. These could include injuring a third party, damaging a third party’s property, or causing a third party financial loss. All of these instances can lead to a customer filing a liability claim against your business. These claims often result in costly lawsuits. In some cases, your business may not have done anything wrong, yet you could still find yourself facing a lawsuit as a result of a liability claim.
Liability isn’t just a high-scoring word in Scrabble (14 points to be exact, 42 if you get a triple word score!). It’s the financial responsibility you have as a small business owner if you have caused damage to a third party. Liability claims can dent your wallet. Having the right insurance coverage can help you protect it.
What are the main types of liability insurance?
Liability risks aren’t one-size-fits-all. They come in many shapes and sizes, which means there are different types of liability insurance coverages that can help you protect your small business. Here are some of the main liability insurance coverages that can help shield your business, whether you’re a contractor, retailer, or consultant.
No matter how small your business is—it’s still at risk for various forms of liability.
Commercial general liability insurance
Commercial general liability insurance, or CGL insurance, is the main ingredient for protecting your small business from liability risks. It’s designed to protect you and your business if you’re found legally liable for bodily injuries or property damage to a third party. Let’s break down these two risks that CGL insurance protects you from.
CGL insurance is the meat and potatoes of your insurance policy. It’s designed to protect your business if it’s found liable for an injury or property damage to a third party.
CGL insurance can help minimize your loss when your business is found liable for an injury to a third party either on or off your premises. Anyone who’s physically present at your business could get injured, such as customers, delivery persons, and cleaners.
Booboos can bruise a customer, but they can also bruise your business as well. If a customer trips and falls while climbing the steps to your retail store, they could file a lawsuit against your business for any injury that was caused. According to Statistics Canada, falls are the leading cause of hospitalized injuries in the country. Lawsuits from slips and falls are common amongst small business owners, so it’s important to ensure you’re protected from this type of risk.
Property damage liability:
Property damage liability is a hefty concern for small business owners. If you’re found legally liable for damages made to a third party’s property, you could face a costly lawsuit. It could also negatively impact your reputation with current clients and prospective customers. For example, if your catering business is working offsite at an office Christmas party, and you spill a giant pot of carpet, your customer could file a property damage liability claim against your business. You’ll have a costly lawsuit on your plate, not to mention the messy reputation you’ll have amongst your client base. At the bare minimum, every business should have CGL insurance to protect them from common risks and losses. TruShield’s comprehensive CGL policies can provide you with the core protection needed to keep your business running smoothly.