Whether you are running a small, medium or large business, liability insurance policies are a necessity. There are specific types of liability policies which are designed to protect your business, as well as you personally. In general, most businesses should be reviewing the two most common types of liability policies, professional and general, to ensure their business, and their personal assets are protected from lawsuits.
The Basics of Professional Liability Policies
Professional liability policies protect your company in the event a customer sues you for certain acts. For example, a physician would carry malpractice insurance while an attorney would carry errors and omissions policies — both are types of liability insurance. These policies help protect a business owner in the event a customer makes a claim against them for unprofessional service including an error which resulted in a financial loss, a breach of a contract with the customer, or poor or shoddy workmanship.
The Basics of General Liability Policies
While there may be some overlap in what is offered between general liability and professional liability policies, theses policies are designed to protect a business owner from lawsuits where a person is injured, there is property damage, or other issues of liability such as with a tenant or an employee. Since general liability policies may offer specific protections such as slander, libel or offer coverage for intellectual property matters, it is important to make sure you understand the specific nuances associated with a policy before you agree to purchase.
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Benefits of Liability Policies for Your Business
Defending against a lawsuit can be time-consuming and costly. One of the first steps which must be made is finding an attorney with experience dealing with the specific type of lawsuit you are facing. When a company has the right liability policies in place, generally an insurance company will have access to a list of attorneys who are fully prepared to defend a case on your behalf.
In nearly all cases, your liability policy will cover the costs of defending against a lawsuit including paying investigators, attorneys, witness costs as well as payments ordered by the court including settlements and where appropriate, medical costs associated with personal injury.
Who Should Consider a Liability Policy?
Because of the expense involved in obtaining liability coverage, many business owners want a better idea of whether they need this type of policy, as well as an additional umbrella liability policy. Here are some risk factors which could help determine your need for a liability policy:
- Potential claims of malpractice — if you practice any type of medicine including general medicine, offer dental services, or have a veterinary practice, it is possible for a patient to accuse you of malpractice. Any claims could destroy your practice, even if you have done nothing wrong, because of the financial and time drain of defending against a malpractice claim.
- Claims of errors made — if you are an attorney and have a paralegal who assists you with document preparation, an error in documentation could have a negative impact on a case you are presenting. This could trigger a lawsuit by a client. Real estate professionals deal with numerous transactions and there is always a risk associated with dealing with buyers and sellers. While the risk of a lawsuit may seem minimal, in most cases, it is a good idea to protect yourself.
- Claims from employees or customers — if you have an employee or you intend to interview potential employees, there are dangers of facing a lawsuit claiming you violated employment laws. If your business has customers walking through the door, the potential of one of them falling in your office means you are facing the potential of a personal injury lawsuit..
Each business has unique needs when it comes to insurance policies. For nearly all business owners, a liability policy is a good idea. Instead of running the risk of being under-insured, contact Chandler & Knowles CPAs by filling out our online form, calling 817-385-9158, or visiting one of our offices in Flower Mound or Addison, TX and let us help you with your insurance planning needs.