If you’re starting a new business, you probably already know you’re going to need some type of liability insurance but you may not be aware of all of the factors that determine the types of liability coverage you’ll need for your specific business.
At Millhiser Smith Agency, we have the experts to help you find the right insurance for your needs.
Below, we’ll explain the different types of liability insurance that Millhiser Smith offers as well as the person(s) and situations that each protects.
General Liability Insurance
General Liability Insurance provides coverage if you are liable for damages to other individuals arising from your premises, general operations (ongoing and after completion) and products manufactured or sold.
Only General Liability can protect your business for physical damages, such as third-party bodily injury and property damage. For example, General Liability Insurance coverage protects your business if a visitor slips and falls on your property or if one of your employees causes damage to another individual’s property.
Professional Liability Insurance
Professional Liability Insurance coverage is designed to protect the employer from actions that stem from their professional capacity and training. The coverage is called “professional” for some and “errors and omissions” for others depending on the particular coverage form and the company issuing the coverage.
Whether your business is at fault or not, a lawsuit may occur if a third party claims to have incurred financial losses due to any of the following:
- • Business provided negligent professional services
- • Business failed to uphold contractual agreements
- • Business provided incomplete or dishonorable work
- • Business made costly mistakes or omissions
This is why it is essential for any service provider to carry Professional Liability Insurance. Just as only General Liability Insurance can protect against third party physical damages, only Professional Liability Insurance can protect you from third party financial losses.
Director’s and Officer’s Liability Insurance
Director’s and Officer’s Liability Insurance protects corporate directors and officers against claims, usually by stockholders, alleging loss arising from mismanagement. Claims from those other than stockholders are also covered.
Anyone who serves as a director or officer for either a for-profit or non-profit organization may be at risk of a personal claim as a result of that position. Director’s and Officer’s Liability insures against personal losses and covers legal fees and other costs that may be incurred as a result of a lawsuit.
Employment Practices Liability Insurance
Employment Practices Liability Insurance covers lawsuits brought by employees (past, present or prospects), or governmental entities against the insured for wrongful acts during the employment process.
The most common types of claims covered under this insurance, include:
- • Sexual harassment
- • Discrimination
- • Breach of employment contract
- • Failure to employ or promote
- • Negligent performance evaluation
- • Wrongful discipline
- • Invasion of privacy
- • Wrongful infliction of emotional distress
- • Mismanagement of employee benefit plans
- • Wrongful termination
Directors, officers, management personnel, and other employees involved in the employment process may need to be covered under Employment Practices Liability Insurance.
Pollution Liability Insurance
Pollution Liability Insurance may be written to cover pollution exposure associated with a business’s property and operations, including costs of cleanup and remedial action at third party demand or government order.
While General Liability Insurance covers third party physical injuries, there is a pollution exclusion that eliminates coverage for pollution exposure. This is why it is essential to purchase additional pollution insurance if there is any risk of injury due to a toxic substance on your property or as a result of your work.
For example, contractors need to be covered for exposure to lead-based products or asbestos. In a less evident example, companies that purchase an industrial site discovered to contain hazardous waste can be held liable and need to have the proper protection.
Most businesses will require a combination of the aforementioned types of insurance. The type of coverage you will need depends on both your location and the perceived risk associated with your type of business. To be sure you receive the full coverage you need, contact Millhiser Smith and speak with one of our knowledgeable professionals.