When Is Liability Insurance Needed?

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What Liability Insurance Do I Need?

What liability insurance do I need? As a business owner, you may be wondering, “When is liability insurance needed?” or “How much liability insurance do I need?” General liability insurance is an essential coverage that many businesses need because it helps protect them from certain lawsuits and risks that can come up during normal operations.
This coverage, also known as commercial general liability insurance or business liability insurance, helps cover claims that your business caused:
  • Bodily injury, such as a customer getting hurt after slipping and falling in your store
  • Property damage to someone else’s belongings
  • Personal injury, like libel or slander
If you don’t have liability insurance coverage, you risk having to pay for these kinds of claims out of pocket. Lawsuits can put you out of business, which highlights the importance of liability insurance for your business. It can help protect you so you can focus on running a successful business.

Three Times When Liability Insurance Is Needed

When is liability insurance needed? Most businesses need general liability coverage. Sometimes, other businesses or organizations require your business to have this insurance. This can include when your business:
  1. Signs contracts with other companies or clients
  2. Leases office space
  3. Applies for a professional license

How Much Liability Insurance Do I Need?

How much liability insurance do I need? You can use a few key questions to help determine how much liability insurance your business needs. These include:
  • What type of business do you have?
  • How many employees do you have?
  • Where is your business located?
  • What does your state require for insurance?
  • Is liability coverage required?
  • What types of coverage is essential for your liability insurance policy?

What Is Required of a Business That Applies for Liability Insurance?

When you get liability insurance, insurance companies will ask for certain information, like your:
  • Business type
  • Years in operation
  • Previous or existing insurance policy
Insurers use this information to examine the amount of risk your business faces. They’ll analyze your history of insurance claims and the type of business you run. If something stands out as too much of a risk, your insurance cost may increase or an insurer may not offer a policy.
However, in most cases, you’ll be able to get coverage with The Hartford. We offer broad coverage options that may fit your needs. Get a general liability insurance quote today.

Does Every Business Need General Liability Insurance?

States don’t typically require businesses to carry general liability insurance. But even if it’s not required, it’s good to have. Small businesses can benefit from this coverage because it helps protect against risks that can come up during normal operations. While small business owners try to run their company perfectly, mistakes can happen. If they do, having the right insurance coverage can help protect your assets and give you peace of mind.
Let’s say a customer visits your store. On their way out, they slip on a wet floor and break their wrist. Because this is a covered loss under general liability coverage, your insurance company can help pay for their medical expenses.

Business Liability Policy Coverage Limits

Our business liability insurance gives businesses a range of protection. Find out more about the different types of coverage and associated limits that can help protect you and your business.
Liability and Medical Expenses
  • Helps pay for bodily injury, property damage and medical expenses from an occurrence.
  • Limit: $300,000; $500,000; $1 million; $2 million each occurrence limits options. Aggregate limits are twice the occurrence limit.
Medical Expenses
  • Helps cover medical expenses for bodily injury claims that occurred on your business premises, regardless of fault.
  • Limit: $10,000
Personal and Advertising Injury
  • Helps pay for damages for personal and advertising injury sustained by a person or organization.
  • Limit: Personal and Advertising Injury limit is equal to the Liability and Medical Expenses limit selected. This coverage is subject to the General Aggregate limit, which is twice the Liability and Medical Expenses limit.
Damage to Premises Rented to You
  • Helps pay for property damage to premises you rent for your business.
  • Limit: Equal to Liability and Medical Expenses limit, but a maximum of $1 million.
Keep in mind that these coverages only help protect your business up to the liability limits of your specific policy. If a liability claim exceeds your policy’s limits, you’ll have to pay the difference. That’s where commercial umbrella insurance can help, extending the limits of certain liability policies to help cover expensive claims.
Your liability policy also likely includes aggregate limits. This is the maximum amount of money your insurance company will pay for certain types of damages. So, it’s important that you go through your policy carefully and make sure you understand how it works.
If you need help, our specialists can answer your questions and make sure you have the right amounts of coverage for your business.

What Is Typically Not Covered by Liability Insurance?

Your business’ liability insurance doesn’t cover every type of claim. You’ll need other types of insurance to help cover claims of:
  • Work-related injuries or illnesses that your employees get from their jobs. Workers’ compensation insurance can help pay your employees’ medical bills and give them other benefits to help them recover from a work-related injury or illness.
  • Property damage to business vehicles sustained in an accident. You’ll need a commercial auto insurance policy to help cover these damages. Be aware that laws vary by state and you may have to carry a certain amount of bodily injury liability, property damage liability coverage and personal injury protection (PIP).
  • Employment-related claims such as sexual harassment, discrimination or wrongful termination. Employment practices liability insurance can help cover your costs to resolve these kinds of claims.
  • Mistakes in professional services given to a customer. To help cover this kind of claim, you’ll need professional liability insurance.
These other policies can help you create comprehensive insurance coverage for your company.

Do I Need Liability Insurance?

Running a small business is hard work. In addition to everything you do to grow your company, you also face different risks that can occur from everyday operations. If you’re still not sure if you need liability insurance, consider these facts:
  • Floors and flooring materials contribute to more than 2 million fall injuries a year.1
  • Four out of 10 small businesses are likely to experience a property or liability claim in the next decade.2
  • A lawsuit can increase the average general liability claim to more than $75,000.3

Am I Required To Have Employer’s Liability Insurance?

If your business has employees, most states require you to have employer’s liability insurance. The good news is that this coverage is a part of workers’ compensation insurance policy. It helps protect your business if an employee or their family sues you for a work-related injury or illness.

How Do I Get Liability Insurance?

If you’ve realized your business needs liability coverage and you’re wondering how to get liability insurance, we can help. We make it easy for you to get a liability insurance quote online. And when you work with us, you’ll have peace of mind knowing an insurance company with over 200 years of experience has your back.
Our specialists can help you every step of the way. Whether it’s getting the right type of coverage or helping with a claim, we’re here for you. Get a general liability insurance quote today.
1 National Floor Safety Institute, “Slip & Fall Quick Facts”
2,3 The Hartford, “The Hartford Reports: More Than 40 Percent of Small Businesses Will Experience a Claim in the Next 10 Years”
The Hartford shall not be liable for any damages in connection with the use of any information provided on this page. Please consult with your insurance agent/broker or insurance company to determine specific coverage needs as this information is intended to be educational in nature.
The information contained on this page should not be construed as specific legal, HR, financial, or insurance advice and is not a guarantee of coverage. In the event of a loss or claim, coverage determinations will be subject to the policy language, and any potential claim payment will be determined following a claim investigation.
Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd’s Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. In Arizona, New Hampshire, Washington and California, the insurance is underwritten by Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Fire Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, Hartford Lloyd’s Insurance Company, Hartford Underwriters Insurance Company, Maxum Casualty Insurance Company, Maxum Indemnity Company, Navigators Insurance Company, Navigators Specialty Insurance Company, Pacific Insurance Company, Property and Casualty Insurance Company of Hartford, Sentinel Insurance Company, Ltd., Trumbull Insurance Company and Twin City Fire Insurance Company. The Hartford® is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Fire Insurance Company.
The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including Hartford Fire Insurance Company. Its headquarters is in Hartford, CT.
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