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Liability insurance provides a financial shield in the event of an accident that could lead to costly claims. These claims include damage to other people’s property and injuries to others, both of which can deplete a business’s assets.
Most homeowners policies include personal liability coverage. Other types of coverage are available for businesses and professionals.
Personal Liability Coverage
Personal liability insurance—which comes standard with home, renters and condo policies—helps pay for legal fees and damages if you’re sued because of someone’s injury or property damage you caused. It also helps cover medical expenses for people who are accidentally injured on your property and the cost of repairing or replacing damaged items. If someone dies as a result of an accident at your house, personal liability coverage can help pay for death benefits for their family members.
It doesn’t include claims related to car accidents or business-related activities, which are typically covered by separate policies. For example, if your poodle bites your neighbor, personal liability would pay for their medical bills, but not the costs of a lawsuit if they sue you for emotional distress.
If you have a high net worth, a standalone personal liability policy or an umbrella policy might provide more protection with higher limits. Generally, these policies are more expensive than standard home and auto insurance, but they help you avoid a loss that could wipe out your entire savings or more. That’s because plaintiffs are more likely to go after your assets if they believe you have enough money to pay a judgment. To avoid this, you need to understand your risks and how much coverage you need. That’s why it pays to shop around for the best rates on home, auto and umbrella insurance.
Commercial Liability Coverage
Commercial general liability insurance (CGL) is a basic business policy that safeguards your small business from the financial fallout of common incidents that can happen anytime. For example, a customer might slip and hurt themselves in your retail store or an off-site work mishap could ruin client property. The cost of defending these claims against your company can add up quickly and easily. It’s no wonder customers and clients expect that you carry high limits of coverage on your commercial policies.
In addition to protecting against these unforeseen losses, CGL provides your business with a valuable asset: peace of mind. This is important for all types of businesses, whether they are home-based or operate a large facility. There are three primary coverage sections in a CGL policy: premises liability, products liability and completed operations. Premises liability protects your company against claims resulting from accidents that occur on your business’s property or from work being done off-site. Product liability covers injuries or damage to customers or their property that results from the use of a company-owned product. Completed operations protects a company against the risk of accidents that happen after the sale of a company-owned product or service.
CGL also includes a section that determines the policy valuation method for any covered loss. The most common valuation is Actual Cash Value (ACV), but you can choose to select agreed value or replacement cost. Talk to your broker-agent about this and other policy details.
Business Owner’s Policy (BOP)
The business owners policy, or BOP, is a package of property and general liability insurance that can protect your small business from the risks of a lawsuit. It also helps you recover from a disaster that damages your property or closes your business. It isn’t a one-size-fits-all policy, and you can customize it with optional coverage endorsements like professional liability or employment practices liability.
The BOP’s property portion helps protect the property you own, lease or rent (including buildings, furniture and inventory) while the liability portion safeguards your business from claims made against it for things like customer injuries, damage to rented premises and certain types of advertising injury. You can also add other policies to a BOP to give it more comprehensive coverage, including hired and non owned auto, worker’s compensation and data breach and cyber liability insurance.
You may be eligible for a BOP if your business has 100 employees or less, and revenue under $5 million per year. However, you may have to buy a commercial package policy (CPP) instead if your business meets certain criteria, including having a higher risk of loss or being in an industry that requires more specialized insurance.
The cost of a BOP depends on the type and value of your property, its location and your claims history. You might also have to pay more if you want to add optional coverages or if your business is located in an area prone to flooding, earthquakes or hurricanes.
Umbrella Policy
A personal umbrella policy provides liability protection above the limit of your existing auto and home insurance policies. It offers peace of mind for those with significant assets or who may be at higher risk of being sued. Umbrella insurance protects against large judgments that could wipe out your savings, financial holdings or even future potential income. It can also shield your retirement funds, personal property and the hard-earned equity in your home from being taken by creditors.
Umbrella insurance typically costs less than $1 a day and is available in $1 million increments up to $10 million or more. However, it does not provide coverage for any damage caused intentionally. This includes things like slanderous social media comments or if you cause a hazard on your own property that could have been prevented. It does not cover business-related claims, so a separate business liability policy should be purchased if applicable.
An umbrella policy typically applies to your home, auto and sometimes boat insurance policies. It kicks in when the base liability limits of those policies are exhausted and often covers a wide range of issues, including libel, slander, false imprisonment and invasion of privacy. It does not, however, cover your own medical expenses or repair bills for damage to your own property (these are typically covered by your health and auto policies). Your homeowners and auto insurers may require a minimum amount of base liability coverage before you can purchase an umbrella policy.assurance rc