Small business liability insurance: Why it matters
Business liability insurance is any type of commercial insurance that defends against accusations that your business caused damage, injury, or loss. It's recommended for all small businesses because of the high cost of lawsuits.
Can liability insurance protect your small business against lawsuits?
Companies that interact with the public in any way are at risk of lawsuits. This includes working with clients, customers, or even delivery people.
For example, a client could trip over a loose power cord in your office and sue your company over the injury. Liability insurance protects your business from lawsuits over:
- Bodily injuries
- Advertising injuries
- Mistakes or negligence
- Property damage
- Data breaches
- Auto accidents
There's no single policy that covers all of the above risks. Small businesses can choose the liability policies that make sense for their business's unique risks.
Companies that purchase a liability insurance policy:
- Provide a service or advice
- Regularly interact with clients
- Are active on social media
- Want protection against employee lawsuits
- Handle sensitive client information
- Drive as part of their work
- Operate a storefront
Which business liability insurance policies does your company need?
We recommend these three liability policies for most tech companies. Other policies apply to businesses with specific risks.
General liability insurance
If your company is active on social media or invites clients to its office, then general liability insurance is a must-have policy. This policy protects against the most common third-party lawsuits. Examples include:
- A client slipping on a wet floor at your office and breaking a leg
- A competitor accusing your company of defamation for something said on social media
- One of your employees dropping and damaging property that belongs to a client
Because accidents can be expensive, your clients or commercial landlord might request a certificate of insurance proving that you carry this policy.
Errors and omissions insurance
Every tech company should consider errors and omissions insurance (E&O) to defend against the risks of working with clients. If a client accuses your company of late, incomplete, or erroneous work, E&O can cover your legal expenses.
Cyber liability insurance
Companies that conduct business online are open to risk. Cyber liability insurance helps pay for the aftermath of a data breach or cyberattack at your business.
This policy can also cover legal expenses if a client affected by a breach blames your company for failing to prevent it.
Other important liability insurance policies
Tech businesses that hire employees or own company vehicles may need additional coverage. The following liability policies address specific risks:
Commercial auto insurance protects vehicles owned by your tech business.
Hired and non-owned auto insurance provides liability protection for vehicles used but not owned by your business, such as a personal or rented vehicle used for work errands.
Employer's liability insurance protects a tech business against employee lawsuits over injuries. It's almost always included in workers' comp insurance.
Commercial umbrella / excess liability insurance boosts the protection of your current liability policies.
Which small business insurance policies does your state require?
Small business insurance costs
Every small business pays different premiums for commercial insurance. The cost is based on several factors, such as:
- Which insurance policies you choose
- Your profession’s level of risk
- Policy limits you choose
- Where your company is based
- Number of workers at your business
Small businesses can bundle policies for a discount
It's often possible to bundle certain types of coverage to save money. For example, you can bundle general liability insurance and commercial property insurance in a business owner's policy.
Ask your TechInsurance agent if your company is eligible for any bundles or discounts.