Liability insurance protects your business from lawsuits -- both the legal costs and the settlement or judgment costs, if any. General liability covers injuries and damages that occur in the course of doing business. Casualty insurance focuses on injuries on your business premises and crimes against it. Property insurance covers losses to your land, buildings, and belongings, and it is sometimes combined with casualty insurance.
When Things Go Wrong
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"General" liability insurance sounds as if it covers everything you might be sued for, but it generally covers injuries and damages caused by you and your employees. General business liability policies typically include mistakes that cause injuries on your property. It usually also covers injuries involving your product after it leaves your hands and injuries for other companies' products if you sell them. Also included are problems with work you've done on your clients' premises, false claims in advertising and the cost of battling defamation -- inaccurate statements that make you or your business look bad.
What Isn't Always Covered
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General liability has its limitations. It does not automatically cover the activities of licensed professionals who work for you, such as physicians. For those employees, you will need a professional liability insurance. The general-business equivalent is called errors and omissions coverage. Nor does general liability cover worker's compensation; that's a separate type of insurance. General liability may not cover damages for pollution. It may or may not cover business interruptions if you have to close temporarily -- for example, for repairs to the premises. You may want to ask your insurer about riders, or additions, to your policy for such risks.
Crime and Injury Costs
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Casualty insurance covers crimes and accidents on your premises. It includes a grab bag of issues from terrorism to fraud to burglary to identity theft to the misdirected softball that goes through the store window. Since casualty incidents overlap with some other types of insurance, this coverage may be folded into other types of policies. Accidents may be covered with commercial general liability. Thefts may be covered in property-casualty insurance. Property insurance protects your premises and belongings from damages caused by other people and by hurricane, tornadoes, earthquakes and fire. Vehicle insurance combines both casualty and property damage.
Business Owner's Policies
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Your policy doesn't have to reinvent the wheel by including every specific mishap. Small businesses can get coverage through a relatively standard business owner's policy, or BOP, which bundles together everything a business owner typically needs. Such insurance is ideal for a business that faces relatively low costs of damage. A web developer is an example. For big-ticket loss potential -- for example if you run a nursing home or build houses -- you also can buy excess insurance that covers damages beyond those typically covered in a general liability policy.
