Businesses across industries face a wide range of risks during operation. One of the main risks is lawsuits, either from employees, business partners or clients. Business liability insurance it designed to provide coverage for legal expenses related to such lawsuits.
There are four main types of liability insurance policies available for businesses.
General Liability
General liability is perhaps the most commonly used liability insurance by businesses. This insurance policy covers accidents and acts of nonprofessional negligence that result in property damage, bodily injury or personal and advertising injury of a third party.
It will cover medical expenses related to an injury obtained on the business’ property, property damage to a third party as a result of everyday work activities, and legal expenses related to a claim of personal and advertising injury (which covers libel, slander, copyright infringement and more).
Professional Liability
Professional liability specifically covers lawsuits concerning professional negligence that result in a client’s monetary loss. It covers claims regarding professional or specialized services. Professionals who commonly carry this liability insurance include:
· Accountants
· Medical professionals
· Trainers
· Contractors
· Photographers
· Consultants
This is not an exhaustive list. Any person or business that offers a specialized or professional service should carry professional liability insurance.
Directors and Officers Liability
Directors and officers insurance (D&O insurance) covers the directors and officers of a business from claims regarding their activity on the board. This includes claims over:
· Stock performance
· Mismanagement of fiduciary duties
· Exceeding authority
· Failing to comply with laws and regulations
· Employment practices liability
These claims may come from shareholders, investors, employees or clients.
Employment practices liability (EPLI) is additional coverage that can come with an enhanced directors and officers policy. EPLI covers claims from previous, current or potential employees concerning HR issues such as discrimination, sexual harassment, failure to promote, wrongful firing or hiring, mismanagement of employee benefits and more.
Cyber Liability
In these modern times, the majority of information is stored online or electronically. Cyber liability insurance covers liability related to customers and third parties who have their electronically stored information stolen, damaged or destroyed. Cyber attacks are unfortunately common and can cause sensitive client information to be stolen, damaged or leaked. Cyber liability insurance can help cover several areas of expense relating to data breaches, including:
· Loss or corruption of data
· Business interruption
· Identity theft
· Cyber extortion
· Reputation recovery
Any business that keeps information stored electronically should have cyber liability insurance.