When you own a business, it is wise to protect it from liability that could destroy what you have built from a single claim. To provide such protection, obtaining policies of liability insurance is a smart investment, and generally is affordable. In addition, providing coverage for business property is important as well. Of course, the cost to insure your particular business will depend on the nature of your enterprise, its size, location, and other factors.
While insurance of any kind is something business owners generally don’t like to pay for, but it is best to have coverage should it be needed. Although insurance companies are pleased to accept your premiums, they are never pleased to pay out when there is a claim. You should understand your coverage fully to avoid a claim denial that could leave you paying a liability claim out of your own pocket.
At the Law Offices of Jerry J Goldstein, we have spent nearly 50 years in business law and as small business owners. While our office is located in Palm Desert, California, we represent small business clients throughout the Coachella Valley, as well as in communities in and around Imperial, Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties, among others.
Here is what you should know about business liability insurance coverage.
What Is Business Liability Insurance?
Liability insurance, in general, provides coverage for claims asserted against a business and its insurer by a third party. Depending on the type of coverage you purchase, your policy would protect you against third-party claims such as those resulting from a personaly injurty or death suffered on the premises of your business, a vehicular accident caused by an employee while driving on company business, or a product liability claim for personal injury or wrongful death caused by a product produced or sold by your company. Liability insurance can also provide coverage for libel, slander, false or misleading advertising, or copyright infringement lawsuits. It may also cover you when your business sustains damage in a property you rent for such things as fire or water damage.
Some businesses will benefit from umbrella or excess liability insurance coverage. These policies provide much higher liability limits that provide much more protection for your business and for you personally.
When you buy a business liability insurance policy, you enter a contract with the insurer. As part of that contract, the insurer provides a legal defense for your business should a lawsuit be filed in a third-party claim. Although it is wise for you to have representation from your own small business attorney, the insurance company will do most of the work and expend most of the resources necessary to defend a claim. It is the cost of defending a lawsuit that contributes to the higher premiums generally charged for the initial $1,000,000 of coverage, even if the defense proves that you or your business are not liable for damages.
Types of Business Liability Insurance Coverage
There are three major types of business liability insurance:
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General liability provides coverage for personal injury, wrongful death, and product liability claims provided product liability coverage is included. It also covers damage your business or employees might cause to someone else’s property. This type of coverage might also include protection against libel or slander claims made by a competitor or customer, again provided such coverage is included in the policy of insurance.
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Professional liability insurance is also called “errors and omissions” coverage. This covers your business should a customer claim that the information or advice you gave them caused them to lose money or suffer other damages.
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There are two types of policies of insurance providing coverage for employer liability. First, workers’ compensation insurance is required by states. This would pay for injuries, disability, death, and lost wages for employees injured on the job. Second, employer practices liability coverage would provide coverage for wrongful termination, sexual harassment and other claims unrelated to employee physical injuries.
California’s Business Liability Coverage Requirements
California law requires all businesses with employees to carry workers’ compensation insurance. Additionally, the business must carry commercial auto insurance on vehicles owned by the business. Minimum coverage on each vehicle is $15,000 in bodily injury liability per person, $30,000 per person per accident, and $5,000 in property damage coverage. Coverage of less than $500,000 and preferably $1,000,000 or more is advisable in today’s litigious environment.
Although other liability coverage is not required by state law, it behooves you and your business to have it, including broad umbrella coverage in amounts sufficient to cover possible claims and losses.
What Happens if My Insurance Company Disputes or Denies a Claim?
The reason you buy liability insurance is to avoid having your business and personal assets exposed to liability claims. The reason you are willing to pay premiums for insurance coverage is to assure that you aren’t exposed for damages incurred first in defending a claim and, if such defense is unsuccessful, in having your business liable for payment of the claim. Accordingly, if your insurer denies or disputes a claim, it is not only extremely frustrating but can leave you exposed.
Insurance companies are required to act “in good faith.” However, they prefer to avoid paying claims whenever they can. If in fact your insurer disputes or denise a claim, it is imparative that you receive from your insurer a written explanation of why it disputed or denied the claim. Subsequently you should review your policy carefully to see if the insurer’s determination is accurage. Although policies are supposed to be written in plain language and understandable, they often are unclear. Rather than accept your insurer’s denial or dispute, you should consult an attorney whose practice focuses on bad faith insurer coverage. At the Law Offices of Jerry J Goldstein, we assist our clients by referring them to such attorneys to assure that they are provided the assistance they so desparately need in such circumstances.
Work With a Skilled California Business Attorney
At the Law Offices of Jerry J Goldstein, we are committed to representing the interests of small businesses like yours on multiple issues, including analyzing the types of insurance coverage appropriate for your business Insurance should protect you when you need it. Please note that in providing services outside of our immediate area, we generally don’t bill for travel time from our offices to meet at the business location or home of our clients.