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Small Business Liability Insurance
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Frequently asked questions about small business insurance

Business liability insurance is an insurance category that includes a range of liability policies for businesses. Find answers to your questions about liability insurance coverage, requirements, costs, and more.

Business liability insurance coverage and requirements

Which policies are considered liability insurance?

Liability insurance includes a wide range of policies for tech businesses:

General liability insurance protects your business from lawsuits over personal injuries and property damage involving a client, delivery person, or anyone else who doesn’t work at your company.

Errors and omissions insurance (E&O) provides coverage when a client sues your business over a missed deadline, a bug in an application, or another work mistake.

Cyber liability insurance pays for legal expenses, credit monitoring services, and other recovery costs caused by a data breach or cyberattack.

Commercial auto insurance covers the cost of property damage and personal injuries if your company car is involved in an accident.

Hired and non-owned auto insurance (HNOA) provides liability protection for personal, rented, and leased vehicles that your company uses for business purposes.

Directors and officers insurance (D&O) protects board members and officers from liability if they are sued for a decision they made on behalf of your business.

Employment practices liability insurance (EPLI) covers legal expenses if an employee sues your business for harassment, discrimination, or another violation of employee rights.

Umbrella liability insurance increases the policy limit of your general liability, employer’s liability, or commercial auto insurance policy.

Does errors and omissions insurance include cyber liability coverage?

For many tech companies, the biggest liability risk is a potential data breach. If a data breach exposes sensitive client or customer information, your tech business could be drawn into a cyber liability lawsuit that could devastate both your financial stability and your professional reputation.

Insurance providers recognize that data breaches are a major professional risk for the tech industry. They usually bundle errors and omissions and cyber liability insurance for tech businesses.

These bundles typically include both first-party and third-party cyber liability insurance. The former covers data breaches at your company, while the latter protects your company if a client claims you failed to prevent a breach at their business.

Learn more about what technology errors and omissions insurance includes.

Does directors and officers insurance include employment practices coverage?

Directors and officers insurance is often bundled with employment practices liability insurance. The two policies protect your board of directors and your business from lawsuits over employee hiring, promotions, termination, and other leadership decisions.

Does business liability insurance cover theft or property damage?

Liability insurance typically does not cover your business property. A business owner's policy, which combines general liability insurance with commercial property insurance, can help cover the cost of replacing stolen or destroyed business property. It can also pay for repairing business property damaged by fire or certain weather events.

Is business liability insurance required by law?

Your state may require that you carry business liability insurance in certain situations. For example, if you use a car for work purposes, most states require that you carry either commercial auto insurance or hired and non-owned auto insurance.

A client may require that you carry errors and omissions insurance, which reassures the client that you have the means to pay a settlement or judgment if you or one of your employees makes a professional error.

Your landlord might require that your business carry general liability insurance, which covers legal costs if a client or customer sues over bodily injury or property damage. This policy helps shield your landlord from liability.

Before someone agrees to become a director or officer at your business, they may ask for proof of directors and officers insurance. This policy can protect that person from lawsuits related to decisions they make on behalf of your business. Otherwise, that person could be held personally liable in some instances.

Can I get business liability insurance without a business license?

Yes. In fact, in some cases you’ll need to provide proof of liability insurance to apply for a business license in your state. Even if you don’t plan on applying for a license or forming a business entity, business liability insurance can protect your personal assets from getting tangled up in lawsuits filed by your clients.

Do independent contractors need business liability insurance?

Yes. Independent contractors face many of the same legal risks as other tech businesses. They may need liability insurance to:

  • Adhere to state regulations
  • Fulfill the terms of a client contract
  • Rent a commercial property

Even if a specific liability policy isn’t required, it’s still recommended that independent contractors carry liability insurance to protect against costly lawsuits.

Learn more about business insurance for independent contractors.

Compare small business insurance quotes for your company

Business liability insurance costs

How do I decide which quote to choose?

It may be tempting to simply go with the least expensive quote, but there are several factors you need to consider:

  • Premium (how much the policy costs)
  • Policy limits (the amount it will pay on a claim)
  • Deductible (the amount paid before you can make a claim)
  • Coverage (for example, a BOP bundles two policies)

For advice specific to general liability insurance, check out “How to compare general liability insurance quotes.”

How can I save money on business insurance?

With TechInsurance, you can compare quotes from several providers, which is an easy way to save money on business insurance. Beyond comparison shopping, a business owner looking to save money on insurance can also:

Explore more ways to save money on business insurance.

Is business liability insurance tax deductible?

Yes. Any type of commercial insurance is a business expense, so be sure to deduct your premium payments from your business income. If you carry multiple liability policies, you can deduct the premiums for each policy.

How to purchase liability insurance

Does TechInsurance cover my industry?

TechInsurance specializes in small business insurance for the technology industry, including businesses in a wide range of sectors. Learn more about the types of tech companies we work with.

When should I buy liability insurance?

Many liability insurance policies are claims-made policies that only cover a claim if both the incident and lawsuit take place while the policy is active.

That's why it's important to maintain uninterrupted coverage. Long stretches of time may pass between an incident and the resulting lawsuit, in those states with lenient statutes of limitations.

Most new tech businesses purchase liability insurance early on and maintain the policies for the life of their business so there are no gaps in coverage. If you think your business might be exposed to risk now or in the past because you’ve let a prior policy lapse, bring it up with your insurance agent. There may be ways to extend your protection.

How quickly can I get insurance coverage with TechInsurance?

Applicants typically get proof of coverage within 24 to 48 hours. Our online application for business insurance takes just a few minutes to complete.

To speed up the process, make sure you have basic information on hand, including:

  • Number of employees
  • Estimated annual revenue
  • History of prior claims
  • Details about business operations
  • Desired coverage amount

Your quotes should arrive in your inbox as soon as you finish the application. A licensed TechInsurance agent can help answer any questions throughout the process.

When you purchase a policy, you can download a certificate of insurance right away.

How do I get a certificate of insurance?

Once you’ve paid for your policy, there are two ways to obtain a certificate of liability insurance with TechInsurance:

  • We can email you a certificate of insurance
  • You can access your certificate of insurance by logging into your account

This form is the proof of insurance required by commercial leases, client contracts, and applications for certain professional licenses.

Liability insurance policy claims and changes

How do I make a liability insurance claim?

To make a claim on your business liability policy, contact your insurance provider directly. They will ask for:

  • A description of the incident
  • Basic information about your business
  • Your policy number

Your insurance agent can help guide you through the process and answer any additional questions.

Can I change the policy limit on my current policy?

To change the policy limit on a liability insurance policy, simply contact your TechInsurance agent. The agent can adjust the policy limit to give you more or less coverage, and provide assistance if you need to purchase another insurance policy for your business.

What happens if I cancel my current policy?

If you cancel a liability insurance policy before it expires, you run the risk of paying more for the same policy down the road. Insurance companies typically charge higher rates to businesses with previous canceled policies.

Because most liability policies are claims-made policies, they only provide coverage if both the incident takes place and the lawsuit is filed while the policy is active.

In some cases, years can pass before a client decides to sue over an incident. It’s important to keep your policy active to ensure you’re protected against clients who sue at a later date.

Read more about factors to consider before canceling your business insurance.

Compare liability insurance policies

Errors and omissions vs. professional liability insurance

Errors and omissions insurance (E&O) and professional liability insurance are two names for the same insurance. In the tech industry, this policy is known as E&O insurance, but other industries use the term professional liability insurance. It’s also called malpractice insurance in the medical industry.

Read more about professional liability vs. errors and omissions insurance.

General liability insurance vs. errors and omissions insurance

General liability insurance offers protection if a non-employee sues your business over physical injury, property damage, or advertising injury. Errors and omissions insurance, on the other hand, compensates your business if a client sues over a professional mistake.

Read more about general liability insurance vs. E&O for small businesses.

Cyber liability insurance vs. errors and omissions insurance

Cyber liability insurance covers a gap in errors and omissions coverage that excludes data breaches and cyberattacks.

However, because these two liabilities are a concern for most tech businesses, the majority of tech E&O insurance policies include cyber liability insurance. If your E&O policy doesn’t, then you may need to purchase this policy separately.

Red more about tech E&O vs. cyber insurance.