It’s common for small-business owners to avoid purchasing small business liability insurance under the mistaken belief they can save money without a plan. While it’s true the money going toward a monthly premium could be funneled back into your business, you shouldn’t skimp on liability insurance. In reality, any possible savings you might gain from forgoing a policy could be quickly wiped out if you experience an event that liability insurance would cover.
What liability insurance does
In short, liability insurance protects you and your business from litigation after something goes wrong. Liability policies cover a wide variety of events, but anything that results in bodily or property harm to an employee or customer will generally be covered under liability insurance. This is more important than it might initially seem. Liability insurance prevents people from holding you financially responsible in court, which is necessary in a litigious society where court costs and fees can easily escalate into the thousands.
How much liability insurance your organization needs is closely tied to how much risk your products and services present to employees and customers. If you manufacture electrical tools, for example, you will probably need more liability insurance than a business that only sells house plants.
Things to keep in mind
Having assumptions about your new policy and what it covers is the biggest mistake you can make when purchasing an insurance policy for your business. Never take anything for granted and carefully go through the policy with an agent to make sure it provides the type of coverage that can protect your business from its specific risks.
You’ll also want to consider a policy that provides protection from cyberliability concerns. Small businesses are often easy targets for cybercriminals because their security systems are underdeveloped. Purchase an inclusive security policy rather than gambling with your financial security.
