Learn About The Different Types Of Business Liability Insurance

Written By: Tom Martens on January 30, 2010 No Comment

Any kind of stress, physical injury or monetary loss cause to a person due to the negligence of another person is termed as liability.

Whether you are the proprietor of a small company or the owner of a big multinational company, your business is at a great risk and anyone can sue you at any point of time. You can be held accountable for some kind of negligence in your operations or injury caused to a third party in your business premises. Therefore, you need to safeguard and protect your business from any kind of liabilities by taking business liability insurance.

It is therefore, advisable to opt for business liability insurance, as it pays for your legal expenses (in case someone files a case against you or your products and services), thereby saving a lot of expenditure towards compensation costs to the third party claiming physical damage or financial loss caused due to you or your business. It also covers all the medical expenses of third party (it even reimburses the loss of pay of the individual, pays his pharmacy bills, doctor?s fee, hospital admission charges, etc) who may have been afflicted with a physical injury or mental stress caused by your negligence. The business liability insurance does not, however, cover such cases, where a person is harmed or hurt intentionally and you are liable to face the consequences.

There are 3 types of business liability insurance, that are means for different kind of business risks and these 3 types of business liability insurance are explained below ?

General liability insurance, which is also termed as commercial general liability, is considered to be a broad type of coverage for all types of business set-ups. It protects you against third party claims and liability including claims made for property damage, advertising claims, or the most common form of claim ? that is the claim of physical injury caused on your company?s premises due to your negligence or due to the poor quality of products or services offered by your business. General liability insurance covers the claims made by not only your customers, but also your own employees.

Then second type of business liability insurance is known as professional liability insurance. It is also commonly referred to as the ?errors and omissions? coverage. The professional liability insurance covers such enterprises and businesses that provide services to the public and covers professionals such as financial consultants, stock brokers, environmental consultants, or doctors. Any malpractice or errors on the part of these professionals can result in claims from people who came to seek their services such as claims of financial loss or injury claims. In fact, in several states it is mandatory for professional workers to obtain professional liability insurance to protect themselves from liabilities.

The third type of business liability insurance is called the product liability insurance. This kind of insurance is meant for those businesses which repair, sell, or manufacture any products. The coverage costs pay for those claims which are made by people who have either been injured after using your products or whose property has suffered extensive damage after the use of your products. The coverage costs can vary from case to case, depending on the risk potential of your product and also depending on the degree of damage or injury afflicted to the person who has filed the claim.

Susan Reynolds is a content coordinator for a leading South African Insurance Provider that specialises in Commercial Insurance Policies.