Legal liability

When small business owners become responsible for someone else’s losses, they normally have to compensate the person or entity. Depending on the severity of the loss, the payment can outstrip a business owner’s ability to pay, potentially triggering bankruptcy.

There is insurance for nearly every type of legal liability. Here are some of the most common policies for small businesses:

• General liability insurance protects against customer injuries, damage to customer property, and resulting lawsuits.
• Business owner’s policy offers general liability insurance coverages, and it covers buildings and business property against damage or loss.
• Errors and omissions insurance covers experts in case they make a professional mistake or miss a deadline that negatively impacts a client. This policy is referred to as professional liability insurance for some professions.
• Workers’ compensation insurance provides financial assistance to injured employees and coverage for legal expenses when employees sue a business owner over a work-related injury.
• Commercial auto insurance provides coverage when a driver of a company vehicle causes bodily injuries and property damage to others.
• Employment practices liability insurance covers lawsuit expenses when an employee sues over employment issues such as sexual harassment or wrongful termination.