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.
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.
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, 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.
Ready to protect your business with CGL insurance?
Does your business make or sell products? If so, congratulations! You’re responsible for every single product that leaves your store. If one of those products happens to be responsible for injuring a customer, damaging 3rd party property, or even causing 3rd party food poisoning, your business could be held accountable for the consequences that follow. Product liability insurance can help mitigate the losses you experience from product liability claims. This coverage is usually included in your CGL policy, but it’s always good to double check!
The minute that a product leaves your store, you may be held responsible if it causes bodily injury or property damage to a third party.
Many things could cause a product issue. Here are 3 of the most common reasons:
- Design defect: This issue occurs before the product is even made. Improper design can lead to a product being unsafe or faulty.
- Manufacturing defect: This issue occurs while the product is being made. This suggests that something went wrong during the manufacturing process, whether the product was assembled wrong, or missing an important piece.
- Marketing defect: This type of issue has nothing to do with the product itself, but rather how it was marketed to the customer. Incorrect food labels, incorrect safety warnings (or lack thereof) or insufficient instructions are common (and dangerous) marketing defects.
Here’s the truth about product liability: whether you’re a baker selling delicious cupcakes, or a boutique selling the #trendiest clothes, you should always protect your business from product liability claims. The minute you start selling your product, you’re at risk for product liability lawsuits, which can be very expensive and time consuming. Product liability insurance from TruShield will help ensure that you’re spending less time tangled in lawsuits and more time making and selling the things you love.
Ready to protect your business with product liability insurance?
Professional liability insurance helps protect your business in the event that a client holds you responsible for errors in your work that resulted in a loss, or if they believe your service failed to meet expectations, again, that resulted in a loss.
Professional liability insurance is designed to help professionals protect themselves from costly client lawsuits.
Having professional liability insurance is important because, well, pobody’s nerfect. If you consult, design, or provide any type of service to clients for a fee, mistakes can sometimes slip through the cracks. Whether you accidentally miss a deadline or forget a critical requirement, these types of errors could expose your small business to costly lawsuits from your clients. If a client suffers a loss because of errors in your work, they could file a suit against your small business. Having professional liability coverage built into your insurance policy can help protect your business from the costs associated with these types of lawsuits.
Any small business that provides a service for a fee should consider having this type of coverage, including photographers, graphic designers and IT consultants. Professional liability insurance from TruShield is an effective way to help keep your business shielded from minor mistakes and major lawsuits.
Ready to protect your business with professional liability insurance?
When you’re running your own small business, there are a lot of risks you should be actively protecting yourself from. Liability risks are at the top of the food-chain, whether they’re injuries, property damage, product liability, or professional liability. Regardless of if you’re an electrician, a clothing retailer, or a web designer, you need to protect yourself and your business against the threat of liability claims and lawsuits. TruShield’s wide range of comprehensive insurance packages can help you keep your business protected and ensure that the only time liability poses a real threat is on the Scrabble board.
Other coverage options to consider:
Commercial general liability insurance: Commercial general liability (CGL) insurance is designed to protect you and your business from a loss if you’re found legally liable for bodily injuries or property damage to a third party caused by the product you sell or the service you provide. CGL insurance can also offer protection in situations where you or your employees are conducting business offsite.
Product liability insurance: Product liability insurance is often included in a CGL policy, but not always. It’s important to double check that your small business insurance policy does protect you from risks associated with product liability claims.
Cyber risk and data breach coverage. Cyber attacks are an ongoing threat to small businesses and have continued to rise recently. Cyber event expense coverage is designed to help small businesses that rely on technology to help mitigate some of the expenses that may incur as a result of a cyber hack.
Property insurance: As a small business owner, you likely rely on your property, tools, equipment and technology to help keep your business running. If one of those key pieces of the puzzle was damaged and needed repair, you may not be able to continue operations. This is when you need property insurance coverage.
Equipment breakdown insurance: Your equipment is covered in your property insurance policy for damage caused by external sources, such as fire and weather damage; however, you may not be covered for electrical or mechanical damage. In these situations, you’d look to your equipment breakdown insurance.
Commercial auto insurance: If you or your employees use your vehicle for business purposes you need commercial auto insurance to protect that vehicle in ways your personal auto policy may not be able to.