How much liability insurance does your business need?

Most business owners know that they need liability insurance, but it can be difficult to determine just how much liability coverage you need.

The best way to identify your risks and prepare for them appropriately is to talk to an experienced agent. Here are some general guidelines to keep in mind.

Identify the types of liability coverage you need

General liability insurance is the most basic coverage required of every business, but it’s not the only one you should consider. Here are the most common types of liability insurance:

General liability

This covers injuries experienced on your property, property damage or injuries caused by you or your employees, legal defense fees, awards and settlements and claims of libel, slander and copyright infringement.

Professional liability

Also known as errors and omissions insurance, this covers legal defense fees, awards and settlements in the event a client alleges you provided poor advice or consultation.

Auto liability

This covers injuries and property damage caused by company-owned or -operated vehicles. Even if your employees use their personal vehicles to do work, you must have commercial auto liability coverage.

Employment practices liability

This protects your business against claims of discrimination, sexual harassment and unfair employment practices.

Umbrella insurance

This provides additional coverage above and beyond the limits of your general or auto liability policies.

Determine your risk

Once you’ve identified the types of business liability insurance you need, you must determine the level of risk you face in order to choose appropriate policy limits. The following questions can help you determine your risk:

What type of business do you run?

Businesses in certain industries face more inherent risk than others. A retail store, for example, has a much greater risk of a customer being injured on its premises than a business that deals with clients remotely, and a construction company with heavy equipment could face a much bigger injury or property damage claim than a company operating smaller vehicles.

How big is your business?

The more customers or employees you have, the greater the chances of an accident or injury.

How much experience do your employees have?

Inexperienced employees are more likely to make mistakes resulting in liability claims.

Where is your business located?

Liability claim awards and settlements vary heavily from state to state. Consult an insurance expert with experience in New Jersey and any other states you do business in.

Choose your policy limits

General liability insurance typically has coverage limits of $300,000, $500,000, $1 million and $2 million per claim. The most popular choice for small businesses is $1 million per claim, but you should always speak to a qualified insurance agent before making a decision. Contact John B. Wright Insurance today for a complimentary discussion of your business insurance needs.