Owning any business comes with risks and every business comes with liability. It is therefore advisable for businesses to obtain insurance for protection against unforeseen events. Small business insurance such as General Liability Insurance can give an LLC such protection. Although it is not required by most states for a business to have General Liability Insurance coverage it is the smart choice. Lawsuits can run into thousands of dollars and in some instances even mean the closure of a business.
General Liability Insurance protects the business in the event of claims such as bodily harm, property damage, and reputational harm. In other words, a General Liability policy is put in place to protect the assets of the business. There are however also other benefits for an LLC to have this type of insurance coverage. Below are the top 5 benefits of having General Liability Insurance:
Provides protection against the unforeseen
No business has control over all the aspects of its operations and accidents can happen. Having insurance coverage provides ease of mind that the business is covered in the event of an unexpected accident. Businesses whose employees regularly meet with clients or perform work off-site are generally more at risk for liability claims Some of the claims covered under General Liability Insurance are:
- Injury to a person causing physical harm.
- Damage to property whether a client’s or owned by the business.
- Any medical payments resulting from injury to a person.
- Personal liabilities such as copyright violation, slander, invasion of property, or wrongful convictions.
- Advertising liabilities when for example a business is affected negatively and incurs losses due to advertising from another business.
- Legal defense and judgment when a suit is brought against the business.
Not all policies or insurance providers are the same so it is important to understand fully what exactly is and isn’t covered when purchasing liability insurance.
Indicates a stable and established business
General Liability Insurance shows others that the business values its own and other assets. It not only shows that the business wants to protect itself, but that it also has its customer’s best interest in mind. Potential customers or clients will also see the business as being more responsible and trustworthy and will be more likely to recommend the business to others. A business able to produce a copy of its insurance cover to potential clients instills confidence that the business is able to perform the work required. It can, therefore, be a great selling feature for any business.
Assist in obtaining more business or larger contracts
Although not required by many states, some businesses will require companies bidding for specific work to have an insurance policy in place. By having General Liability insurance, the business may already be one step ahead of its competitors. Potential clients feel more confident knowing that they will not be held liable for any possible mistakes. By showing that the business also does not wish to be a recipient of a claim, customers might assume that the business holds a high standard of safety and will be more likely to work with them.
Exhibit care for employees
It provides ease of mind to employees of the business to know that the work performed is protected via an insurance policy. Employees that feel cared for by the business are also more likely to perform their work at a higher standard which could result in less liability. When the business cares for the employees, the employees are more likely to care for the business.
The benefits of legal assistance
General Liability Insurance also protects the business as the policyholder in the event of a lawsuit filed. It often compensates the policyholder in terms of legal fees incurred. In the event of an accident claim against the business due to a mistake, a liability policy can often assist in reaching a settlement with the affected party. Even if the business is found not to be liable, the legal costs can still run into the thousands and the policy can assist in covering those costs.
It is important to note that all businesses have different requirements when it comes to insurance. Some may have to purchase additional insurance depending on the type of business and its operations. Other insurance policies that might be required in addition to General Liability Insurance are:
- Professional Liability Insurance covers a business in the event of a malpractice suit. Businesses such as accountants, lawyers, web designers, etc may require this type of policy as they provide a professional service to their customers and can easily find themselves on the wrong side of a malpractice suit.
- If a business hires employees, the business will need Workers Compensation Insurance. This is separate from General Liability Insurance and will cover the medical bills in the event of injury to the worker while performing their tasks. It may also cover a portion of the employee’s wages should the employee be unable to continue work.
- Auto Insurance is required if a business owns vehicles that are used for business operations. In the event of a motor vehicle accident, the insurance will cover the costs incurred. Depending on business operations, a vehicle can be its most valuable asset. Auto Insurance can assist the business to continue its operations even in the event of an accident by covering the cost of repairs or replacements.
In other words, review the needs of the business and decide what insurance the business will benefit from. it is not always required by the state to have a liability insurance policy in place, but it is highly recommended. Not only will the business be protected in the event of a lawsuit, but the business can also benefit in terms of growth. The 5 benefits outlined above are not the only advantages of having a General Liability Insurance policy in place but should give any LLC a good indication of why it is important to invest in one.