Does My Business Really Need Liability Insurance?

The Short Answer is YES.  And whether you are a small Crafter or a large Company the answer is the same. You could get sued for many reasons and you need to protect yourself. Just the Attorney fees can be more than your savings might be able to cover, let alone if a judgment was ruled against you.

Is my business covered if you are sued by one of my customers?

When it comes to business insurance, different events are covered by different policy coverages.

For instance, if someone gets hurt on your property or while you are working for them, the coverage you would need is General Liability. General Liability also protects you if you damage someone's property.  All Liability policies include this coverage. Where and when you are covered will be in your policy also. Some policies are worldwide and some are limited to your location.

But what if my customer is injured by one of our products after they bought it?

In this case, you would need a coverage called Product Liability.  Manufacturers, wholesalers, retail shops, and small vendors, all need this coverage.

Insurance companies can add this coverage and will charge you based on the exposure or risk of your product. A good example is the difference in Risk of Fireworks vs Greeting cards. 

Another factor they use to rate you is the amount of exposure (number of items you sold), the more you sold - the greater the exposure to claims - the higher the rate.

They also will rate you based on who made the item and where it was made. If you bought the item overseas and sold it in the States, the person who was injured may not be able to make a claim against the manufacturer in another country and then you would be next in line.

If you perform a job for someone and the work you did was faulty and they were hurt after you left - then Completed Operations is the coverage you would need.

Other coverages you may want to add to your policy include Contractual, Personal Injury, Cyber Liability, Hired, Non-owned Auto, and Tenant Liability to name a few.  Each business has a different set of exposures based on all kinds of factors.  Make sure to tell your Broker about everything you do.

Can my employees sue me?

Yes, that is why Employer’s Liability is included in the Worker’s Compensation coverage. Many Companies are also purchasing Employment Practices Liability (EPLI) coverage to protect themselves from suits of harassment, wrongful termination, and other claims.

Also, talk to your broker about the things that are excluded from the policy. Two of the main exclusions are Intentional Acts and not following the Employment Laws and Regulations.

As always, read your policy and ask for clarification when needed. By knowing you are covered, you can focus on making your business thrive.