Many contractors, freelancers and professionals get confused when it comes to liability insurance. After all, there are lots of different business related policies available. Before you buy insurance you need to find out what your main liabilities are. This will help you determine what type of insurance suits your needs.
General Liability Insurance
This type of policy is to primarily cover lawsuits that allege personal injury and property damage stemming from a business’s physical location, their products, and their operations. It usually covers legal defense costs and pays up to the policy limits in the event of settlement or verdict against the business. It covers the insured business, it’s owners, management and employees.
Professional Liability Insurance
Professional Liability insurance is sometimes referred to as Errors & Omissions Insurance. This type of policy is required for many professionals and covers lawsuits alleging errors, omissions, wrongful acts while performing professional services at a cost.
While general liability addresses lawsuits alleging physical or property damage, professional liability insurance focuses on monetary damages. When a client suffers a monetary loss due to a professional’s failure to provide services per the terms of an agreement or contract, they might sue.
Only after determining what insurance coverage a business needs based on local laws, requirements and risks of the industry, can a small business proprietor can start getting insurance quotes. Shopping insurance rates online can also help a business get the right protection for the least amount of money. It’s important to get more than one quote if you don’t want to overpay.
As far as rates go, when comparing premiums, make sure each policy has the same limits. Comparing policies with different limits does not make sense, since lower limit policies will naturally have lower premiums. It’s also acceptable to try and negotiate for more coverage by adding additional risks with some insurers, so if you have certain things you’re worried about in your business do not hesitate to ask for them to be added onto the policy.
When buying either General Liability or Professional Liability Insurance don’t always buy the policy with the lowest price. In most cases, that means you’ll have less coverage or worse, you’ll have difficulty collecting on claims. Instead of the cheap business insurance prices, try to find policies with simple price structures and clarity.
Finally, note that higher deductibles can significantly reduce the cost of monthly commercial insurance premiums. Just don’t choose a deductible structure that will create a financial hardship in the event of a claim. A company with low risks may want to consider lower premium with a higher deductible, but if the risks are significant in your industry, play it safe and pay a little more for insurance with low deductibles.