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What is business liability insurance?

If you own a business, or if you work for a small company, you know that owning and operating a business comes with plenty of responsibility. Even if you operate your business with the utmost care and provide the best quality service and product, a client can still perceive that you have wronged them. And the last thing you want as a business owner is a lawsuit against you. Such an event could be detrimental to you, your company, your employees, and your reputation as a business. But there is a way out. You can protect yourself with liability insurance. But who needs it? And what exactly is liability insurance? Keep reading and you will soon find out.

First, who needs liability insurance? Well, basically anyone who owns their own business (especially a small business) selling a product or service-which really covers most business owners. These days there are many ways that people can find to sue you or your company. If a customer trips on your welcome mat as he enters your office, he might decide to sue you. Maybe an employee leaves the coffeemaker on overnight and damages your landlord's building. Or perhaps a patient knocks over an antique vase as he is sitting in your waiting room, breaking your treasured vase, but cutting his hand. In all of these situations, angry people may decide that you are the cause of their inconvenience and discomfort. They want you to pay for their suffering.

Liability insurance protects you against the financial ruin that often comes from an uninsured lawsuit. There are many ways that you can be considered liable. For example, you are personally liable if you have acted in an irresponsible or illegal manner; if you do not operate your business as a separate entity; if you have signed a personal guarantee for a loan; or if you have personally injured someone. It is a good idea for anyone who owns a business to have liability insurance.

Second, what is liability insurance? Business liability insurance protects your business in the event of a lawsuit for personal injury or property damages. It usually covers the damages from the lawsuit as well as the legal costs. It can be purchased in many forms.

 General Liability Insurance: this is the main form of liability insurance for most businesses. It protects your business from injury claims, property damages and advertising claims. This type is also known as Commercial General Liability (CGL) and may be the only type of insurance that your business needs, depending on your situation.

 Professional Liability Insurance: if your business provides a service (especially a medical one), you will probably want to seriously consider this type of insurance. It covers errors and omissions made by your business. It also covers against malpractice and negligence. In many states, doctors are required to carry this type of insurance. Technology consultants may also need this type of coverage.

 Product Liability Insurance: if you are a small business that sells and/or manufactures products, you probably need this type of insurance. This type of coverage is protection in the event that a person becomes injured or ill as a result of your product. The amount of coverage you need depends on your business. For example, a retailer of chainsaws would have far more risks than a retailer of yarn, and therefore would have a higher premium.

You can buy business liability insurance from most major insurance agencies, such as State Farm or Nationwide Insurance. Be sure to compare rates before making a purchase. The cost of your insurance will depend on your type of business, and the amount of coverage you want.

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