When you open a small business, it's always recommended to have general liability coverage on hand. General liability coverage will protect your small business from lawsuits, if an individual is hurt on your business property, and also covers damages caused by you or your workers. This coverage does not protect the individuals who contract with your small business for services. If an individual who typically works as part of a large company or corporation becomes injured on the property of your small business, they are usually advised to contact their own employer's insurance company, since they are not protected by the small business or LLC policy.
It's often difficult to predict which accidents will occur, but when they do, the results can be devastating. Individuals working on or using your property are more likely to be injured or killed, if a lawsuit is filed against you. Even if you use personal equipment that belongs to the small business or LLC, if the equipment is damaged while being used, the cost of repair or replacement can exceed the value of the equipment itself. If an individual is fatally injured while working on or near your property, the result could be years of lost income and medical expenses, with all of these issues needing to be paid by the individual's family.
Every state requires commercial general liability insurance to protect small businesses. These insurance plans are available through a variety of sources. Most small business insurance companies are set up as cooperatives, so many owners donate their premium payments to fund the programs. Some individuals find it more affordable to purchase general liability insurance as a self-employed person, since they typically would have a much larger deductible. Small business owners may also consider purchasing commercial general liability insurance directly from their state's department of insurance.
Some business owners choose not to purchase general liability insurance policy. If an owner owns his or her own building, vehicles, or business assets, it may be cheaper to simply insure the building and its contents than the land itself. This approach may reduce premiums slightly, but because it doesn't include any of the liability of others, general liability insurance premiums will likely be higher.
A commercial general liability insurance policy will protect against lawsuits in cases where a third party is injured or damaged while on or near your property. In order to determine the level of protection you need, your insurance company will consider the risk of a particular activity and the potential damage if it occurs. For example, someone who owns a skateboard factory may be better protected against a claim brought by someone who was hurt while playing at the factory compared to the risk faced by a person who just happened to be playing on the factory's skateboard ramp. For example, even though a skateboard factory owner may have a lot of expensive equipment on-site, he or she probably isn't a very good skater. If an accident took place while an employee was boarding a skateboard, that could probably result in a claim against the factory for medical expenses, pain and suffering, etc. Therefore, it's important to carefully review your insurance policy to identify the best level of commercial general liability insurance you can afford.
You should also consider purchasing professional liability insurance. If you provide professional services, such as painting, cleaning, landscaping, etc., your customers may be able to sue you for injuries or damages related to the services you provided. Purchasing professional liability insurance is especially important if you operate a garage or another similar business from your home. In many states, it's a legal obligation for a home business owner to maintain professional liability coverage, even if the services you provide are performed out of your home. Therefore, you may be held liable for injuries or damages sustained while rendering these services.
Business owners also need to consider their options when it comes to purchasing special insurance policies for their small businesses. There are generally two types of general liability insurance policies available to business owners. The first is called an umbrella policy. This type of policy provides coverage for various incidents, regardless of who might be at fault in the event. For example, an injury caused by an employee, equipment, etc., that were the result of negligence on the part of a third party, such as a neighbor, would be covered by an umbrella policy.
The second type of policy is known as a “stand-alone” policy. A stand-alone commercial general liability insurance policy generally provides coverage for incidents that occur during the course of your employment. If you're self-employed, you can choose a policy that does not have an umbrella element. If you purchase a policy that does not include an umbrella element, the insurance policies generally exclude incidents that occur both during the course of your employment and while you are engaging in the business of your own. Stand-alone insurance policies are typically the most economical way to insure a small business.
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