Liability Protection - Down to the Basics

Liability protection is the term used to describe several types of insurance generally associated with the potential for causing damage to someone else or their property. To understand why a company needs liability protection in the form of insurance, take a look at the word and some potential points of liability.

Liability is defined as a responsibility, or an obligation. If you damage someone's person or property, you are liable for the actions and in most cases for the cost of the damage.

When you're talking about an object or product, the amount of liability is fairly straightforward. It's typically going to be the amount it costs to replace the object, although there could also be some additional costs. For example, if you damage a video you rented from the movie store, you may have to pay for the movie but you may also be charged for loss of income - the amount of rent the store expected to gain from that video.

When it comes to injury or death of another person, the costs escalate and are incalculable - though the courts will certainly make financial awards if you are found to have been liable for the mishap.

The bottom line is that no one is immune to accidents. Your best intentions can go wrong in an instant and you can be left picking up the pieces. You, your employees and your company can be held financially responsible for amounts of money you can't hope to pay.

This is where liability protection is invaluable. Instead of facing bankruptcy because a customer was injured on your premises, your liability insurance will pay the claim. Instead of spending sleepless nights worrying about money because an employee knocked a priceless vase from a customer's cabinet, your general liability policy will cover the claim. The list of potential claims resolutions goes on because claims and the need for liability insurance is as varied as the clients who seek out liability protection.

So what kind of policy do you need? There are lots of options when it comes to liability protection. The first thing you need to do is assess your needs. What kinds of materials or products do you handle? Where do your employees work - at your own facility or do they travel to customers? When you've carefully assessed your daily activities, you'll have a better feel for the kind of liability protection you need.

As a business owner, you know there are a million ways to cut corners and save money. One place that you can't afford to make those cuts is on your liability protection.