Insurance · October 29, 2020

Common Areas of Business Liability and How to Address Them

Regardless of how small your business is, you can still be personally at risk if something were to happen to the company. That's why it's vital to understand the potential dangers and learn how to guard your company and your finances against costly business liabilities.

Common liability risks

No business is immune to risk. Injuries and accidents in the workplace are common, and getting caught unprepared can be costly. Business liabilities aren't just limited to bodily injury or property damage. Data security and vendor disruption can pose risks, too. In addition, the reputational damage from a serious accident, data breach or quality control issue with a vendor can drive away customers and negatively impact your business's ability to generate revenue.

Some scenarios are common liability pitfalls are:

  • A customer is browsing your retail store and trips on a box left on the floor, breaking their wrist. The customer can sue your business for medical expenses from their injury.
  • Your employee is on a house call fixing a plumbing issue, but they accidentally knock the customer's laptop off their kitchen table, breaking it. The customer can file a claim against your company, citing damage to their property and looking for reimbursement. 
  • You've set up a new social media advertising campaign, but a competing brand thinks you've copied their slogan. They may be able to sue your company over intellectual property rights.

Handling all these areas of risk can be complex, especially if you're a smaller business without sufficient internal resources to stay constantly vigilant of all your liabilities. That's why it's important to realize the potential risks and take the right steps to protect your business.

The role of insurance

Business liability insurance is interchangeably referred to as general liability insurance. In its most basic form, liability insurance helps provide a layer of protection for your business in the event of damages, personal injury or bodily injury at your place of business.

For many business owners, liability insurance is crucial because it covers a large range of potential risks. Depending on the type of policy you get, insurance can also cover medical expenses, legal defense costs and property damage.

Choosing a policy

A quick online search for business liability insurance will provide you with a lengthy list of options. To help keep it simple, here are a few key factors you should consider as you determine which insurance provider is going to fit your needs.

Your risk level

Not all businesses face the same level of risks. A company that has a small factory is going to face more potential risks compared to a simple retail storefront. The more potential risks there are to your company, employees and customers, the more coverage you'll need.

How much coverage you need

This ties into the type of business you have and the risk levels associated with it. However, it's still important to consider factors like your industry, location and yearly revenue to figure the best policy for your needs.

Specific coverage

Evaluate your operations to get an idea of what kind of coverage you need. Ideally, you'll want to work with a provider with experience in your particular industry, covering businesses that are similar to yours. That can help you get the coverage you actually need versus something more generalized that might leave you open to liability.

The process

When shopping for liability insurance, consider how claims are processed. What's the timeline for resolution? Can you make a claim anytime, 24/7, or do you have to wait until regular business hours? Ideally, you want to find a provider who can process claims quickly, on the schedule you need.

Take steps to limit risk

All businesses face potential risks. The best thing you can do is take a hard look at your business operations and determine where the risks lie. This will help you find the best insurance policy to help protect your reputation and assets.


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