Among the various policies available to protect companies from lawsuits, a business owners policy is one of the most useful for small businesses. A business owners policy (BOP) combines general liability and commercial property insurance into a single, flexible policy for small businesses in low-risk industries. Not only does it cover a variety of physical damages to your business’ physical assets, but it also covers a variety of lawsuits.
General Liability Under a Basic BOP
A basic BOP includes general liability insurance, which is one of the most common and useful liability insurance policies. General liability insurance covers claims against a business concerning bodily injury, property damage and personal or advertising injury. This insurance can cover medical bills, compensate for damaged property and cover the business’ legal fees in the face of a lawsuit such as defense costs, court fees, settlement expenses and more.
Since BOPs are customizable, general liability insurance isn’t the only type of insurance that can protect your business from a lawsuit under a BOP.
Some liability insurance protections you may add to your BOP include:
Professional Liability Insurance
Where general liability insurance covers non-professional negligence, professional liability insurance covers professional negligence. This means it covers claims against your business concerning professional or specialized service offered by your business or its employees. Professional mistakes made on behalf of your business that cause a client to lose money can be covered under professional liability insurance. Depending on your industry and location, you may hear different names for this insurance. It is also known as Errors and Omissions insurance, D & O insurance and medical malpractice insurance.
Cyber Liability Insurance
With the majority of business and client information now stored online or at least electronically, the dangers to this information continues to develop. Online attacks can be vicious, especially for businesses that store sensitive client information such as medical history and billing information. Cyber liability insurance, which can be added to a BOP, covers expenses related to cyber attacks such as recovery, extortion and more.
Products Liability Insurance
Products liability insurance covers claims against a business concerning bodily injury and property damage someone else may suffer due to a product sold or manufactured by the company. For example, say your business manufactures hair gel for men. One customer complains that your hair gel caused their hair to fall out and burns to their scalp, and thus decides to sue for compensation. Products liability insurance can cover medical bills damage to property and legal expenses in related lawsuits.
Directors and Officers Insurance
Directors and officers insurance, also known as D&O insurance, serves to protect the key employees of your business from lawsuits concerning their actions on a board of directors. While they are employed, these key officers may face lawsuits concerning misrepresentation of company assets, fraud, theft of intellectual property, misuse of company funds and more. These policies may also include Employment Practices Liability insurance (EPLI), which covers claims against directors or officers regarding discrimination, sexual harassment, wrongful firing or hiring, failure to promote, etc.
Liquor Liability Insurance
Liquor liability insurance is geared specifically for businesses that manufacture, serve or sell alcohol, such as restaurants, breweries, wineries and gas stations. If alcohol is involved in any area of the business, liquor liability insurance is useful to protect the business against unique related lawsuits. This insurance protects businesses in case a patron of their business causes bodily injury or property damage to someone else. For example, if someone purchases alcohol at your gas station, leaves, and vandalizes someone’s property after drinking the alcohol they purchased from your location, liquor liability insurance can cover your business from the responsibility of the damage falling back on your business.
Umbrella Liability Insurance
Umbrella liability insurance is a unique form of liability insurance, as it does not cover one specific danger. Instead, it serves to fill in the gaps left by all of your other liability insurance policies. Umbrella liability can apply to any of the above policies, as well as the liability on your commercial auto insurance policy.
For example, say your general liability insurance policy has a single claim limit of $1 million. After a severe accident, drawn-out court proceedings and finally a settlement, the expenses amount to $4 million. Since your general liability insurance policy will only cover $1 million of these costs, umbrella liability insurance can step in to help cover the remaining expenses.
Every business faces different lawsuits and all industries have varying levels of risk. Be sure to speak with an insurance agent and insure your business with the liability protection it needs.
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