Top 3 Most Common Business Liability Insurance Myths

Business Liability Insurance Myths

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Liability insurance is one of the most important types of insurance that businesses need to acquire. The type of liability insurance you choose will depend on what your company does, who your customers are, and how much revenue you generate. 

This article breaks down the three most common liability insurance myths to help you protect your business.

Myth #1: Your Business Is Too Small 

If you own a small business and think you don’t need liability insurance, that could be a mistake. It’s easy to forget the importance of having the right amount of liability coverage when your business is small. However, it can quickly become a problem for your company if you are sued for something that happened on your property or during operations. Even if you have no employees, something in your office could cause injury to someone else from time to time. And with this much more risk, it’s important to ensure that your company has enough liability coverage. 

Myth #2: You Will Be Protected by Basic Liability Coverage

Liability insurance Newark DE protects your business. In some cases, basic liability coverage might be enough for your business to stay afloat. However, if you are a business involved in a dangerous field, such as mining or manufacturing, then basic liability coverage may not be enough to protect your company legally in the event of an accident. Make sure you know what type of liability coverage you need by talking to a reputable insurance agent who can help you determine how much protection and what kind of coverage would make sense for your business.

Myth #3: You’ll Be Protected With a $1 Million Policy

One common liability insurance myth that many small businesses believe is that they’ll be protected if they have a $1 million policy. This may not be the case, as it only protects the company from an unexpected lawsuit and doesn’t cover the cost of damages in a legal judgment.

There are two types of liability insurance: Commercial General Liability Insurance (CGL) and errors & omissions insurance (E&O). CGL covers losses related to products or services that are sold. E&O covers losses related to contractual agreements between the company and its clients, such as contracts for services rendered, professional malpractice, advertising claims, and more. If you’re looking for coverage beyond this type of liability insurance, you should consider different types of insurance policies like product warranty insurance.

Liability insurance is important for businesses to protect themselves from financial losses that could happen due to their own actions. Business owners and managers should understand the myths and realities of liability insurance to make an educated decision as to whether they need it.

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