Question After years of thinking about it, I’m about to open my own craft store. My insurance quote includes liability coverage, but I really don’t know what this means for my business. What does liability insurance cover?
Joel Brekken is a Farmers Insurance® agent in Duluth, Minnesota. He discusses how liability insurance can help cover some small business risks. .
Answer Congratulations on the new business! Looking into business insurance options is a smart move. Business liability insurance coverage can help you pay legal costs when someone — such as a customer or visitor — is hurt or suffers property damage and blames you and your business. If your company is found to be at fault, your business is legally responsible for the costs.
Let’s say a shopper walks into your store, slips on a rug that’s not secured to the floor properly and hits their head. Your business could be held liable for the person’s medical care, lost income and pain and suffering. A sudden expense like that could devastate a small business.
Your business liability insurance can cover you up to the limit you select and can also help with the cost of your legal defense. If the shopper breaks their glasses or smartphone when they fall, your policy can also help pay to replace the damaged property.
Other kinds of risks may be covered too: for example, damage claims arising from your advertising, like slander, libel and copyright infringement.
Coverage for these risks is known as general liability insurance, and it’s standard on all Farmers® business policies.
You also may want to consider other types of business liability coverage, depending on the risks specific to your company. Product liability insurance provides coverage on the things you make or sell. Professional liability insurance helps cover damage caused by services you provide. You can also get commercial crime insurance coverage for data breaches that expose your customers’ information. Employee practices liability insurance (EPLI) helps cover employment issues like wrongful termination or harassment.
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