General Business News for August 2014

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What Kind of Liability Insurance Does Your Business Need?

What Kind of Liability Insurance Does Your Business NeedIn business, every day is a risk. Whether it’s an employee operating a dangerous piece of equipment, a customer visiting a store or office, or performing services for a client, damages can happen. Every one of these scenarios has the potential to cause serious physical or financial damage that can reach six or seven figures, or more. Understanding some of the types of insurance and the exposures they cover is essential to giving you piece of mind while conducting business. In fact, nearly 9 out of 10 patent infringement lawsuits, for example, were against businesses that make less than $12 million per year.

General Liability Insurance

This type of insurance protects a business against damages that their products or services (physical or information-based) unintentionally cause or are accused of causing toward an individual or property.

For example, if a lawnmower causes severe injuries requiring amputation or a blender injures the operator by slicing off a finger, this type of insurance might provide coverage to a business defendant. Depending on the policy, legal costs might be included within the policy limits or could be provided in addition to policy coverage limits.

Professional Liability (Errors & Omissions) Insurance

Certified public accounts, lawyers, publishers, freelancers and other professionals providing services to clients can unintentionally cause serious financial damage, despite performing due diligence.

For example, if a magazine publishes inaccurate legal advice in an article in a trade publication, a reader (who is also a business owner) relies on it and gets sued by a patron, the reader might have a case against the publisher (and employee or freelancer). Even if the lawsuit is baseless, it still costs money to defend a lawsuit and have it dismissed.

Commercial Auto Liability Insurance

Whether a lawyer or CPA is on the road traveling to see a client or a wedding photographer is on his or her way to a wedding reception, the cost for an employee or business owner who is responsible for an auto accident is high. Whether it’s the vehicle itself that causes the damage or equipment that falls off, the potential damages can get expensive quickly.

Employers have to pay $16,500 on average for every accident, according to the Network of Employers for Traffic Safety, or about 16 cents for every traffic mile. Auto accidents causing injuries cost employers on average more than $73,000, and accidents causing fatalities cost employers more than $500,000 per occurrence.

Worker’s Compensation Coverage

Workers compensation insurance coverage enables employees to recoup wages and have medical bills paid for injuries suffered on the job. While employers must fork over premiums for this coverage, those who elect to do so have much greater legal protections against litigation by an employee. It also saves the employer from government fines to have this insurance is in place.

Data Breach Insurance

Businesses that store any type of personal information, such as Social Security numbers, tax ID numbers, W-2 information, addresses or places of employment, can be liable. Whether the information is breached on a business’ computers or through a robbery, any data not properly stored and then used criminally could subject an employer to severe financial consequences.

Without this coverage, employers can be on the hook for a large financial setback. The cost of a data breach rose 9 percent in 2013 – or about $145 for every record – according to a study by The Ponemon Institute in partnership with IBM. Overall, the study found that data breaches cost $3.5 million, or 15 percent more than 2013’s figures.

While insurance seems costly upfront, the financial costs to one’s company is one risk that can be minimized despite even the best practices of due diligence.


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