3 Things To Know About Liability Insurance For Your Company
After your company is sued one time and you are stuck paying out thousands of dollars because of it, you may decide to increase your liability protection by purchasing an umbrella business liability insurance policy. This type of policy adds an extra layer of insurance coverage to your business, and here are three things you should know about liability insurance.
What Is General Liability Insurance?
General business liability insurance is a type of insurance that protects a business against lawsuits. This can include lawsuits that arise from:
- Injuries that happen to customers of your business while they are on your property
- Defamation or slander
- Misleading advertising
- Illnesses that occur from food you serve
General liability insurance does not cover injuries that happen to your employees though. Every business should have general liability insurance coverage, even though you may never need to use it. If someone ends up suing your business and you lose, this policy will kick in and pay for the damages.
Does It Have Limitations?
The downside to general liability insurance is that it does have limitations, and these limitations refer to the dollar amount of the policy. According to the U.S. Small Business Association (SBA), a general liability policy may cost $750 to $2,000 annually. Even if you purchase a large amount of coverage though, it may not be enough.
If you recently lost a case and had to pay money, it is probably because the settlement amount was more than the value of your policy. For example, if your policy offered $300,000 in coverage and the court awarded the plaintiff $500,000, your company would have to pay $2,000 (the difference between the two amounts).
How Can You Get More Protection?
While you could bump up your general liability policy, the insurance company you work with may have limits, which could prevent you from having the ability to gain more coverage. If this is the case, you could purchase an umbrella liability insurance policy.
Umbrella liability insurance is an extra type of insurance you can add to a normal liability insurance policy. Umbrella policies offer coverage beyond the amount offered by general liability insurance policies, and that is why they are often referred to as supplemental insurance policies.
To learn more about protecting your business and its assets, talk to an insurance agent (from an outlet such as Central Alabama Insurance). Your agent will help you select the right policies and coverage amounts for your business.