If you’re a business owner, you’ll need to get business property and general liability insurance to protect yourself against any business-related claims. Many business owners believe that they can simply shut down to avoid a lawsuit. However, shutting down your business isn’t an effective strategy, as courts generally do not care whether a business is still operational. Regardless of whether you’re in business or not, you’re still liable for any damages that are related to your business.
Below, we outline three scenarios where business general liability insurance can protect your business from risk.
Completed Operations Risk
Running a business carries some unique operational risks. Let’s take the example of a skilled trades contracting business. Say a plumbing company installs pipes that leak, resulting in water damage to a property. This could be extremely expensive depending on the size of the property and the extent of damage. In the event of lawsuit, if the plumbing company does not have general liability insurance, and if the losses are big, it may have to declare bankruptcy and close its business. However, you would still be liable for the damages even after their business has closed. In such a case, commercial general liability insurance would protect your small business.
Product Exposure Risk
This type of risk is commonly faced by wholesale businesses dealing with imported products. Let’s say, for example, a product with faulty wiring results in a fire. This could cause significant damage to a property or cause bodily injury. Depending on the extent of the damage and where it occurred, your business could be sued by the customer. In such a case, business insurance could cover you for any of the damages associated with the product.
Premises Risk
Retail and grocery stores that have customers on their property regularly are always exposed to premises risk. The most common occurrence is a slip and fall accident where a client or customer sustains an injury and wants to pursue legal action. There have been many cases where the injured party asks for a large sum based on not only medical costs, but also lost wages and future earnings. In such a case, business insurance would cover the settlement amount.
Protecting your business
Business owners are responsible for protecting their companies and their personal assets in the event of a lawsuit. Facing a lawsuit can be a stressful, frustrating, and expensive process that can cost you and your business, especially if you don’t have proper coverage. Lawyers’ fees are an expensive part of the process, and can sometimes cost even more than the settlement amount. Knowing the limits of your insurance policy can help you cover your legal fees and allow you to focus on what’s most important: keeping your business operational.
