General, Product, and Professional Liability Insurance

Accidents will happen and if your business is held responsible for an accident or other unforeseen circumstance that in some way harms another person, you can be sued for substantial damages. Liability insurance will pay those damages. This is essential insurance for a business owner and is often included by insurers in a standard business insurance policy called a BOP or “business owner’s policy.” There are several different kinds of liability insurance, including:

General Liability Insurance: General liability insurance pays for damages relating to bodily injury, damage to property, liable and slander, and general personal harm. Often these injuries will have taken place in the business establishment or other property owned by the business, or as the direct result of business-related activities.

Product Liability Insurance: If your company manufactures a product and that product turns out, through any kind of defect, to be unsafe, product liability insurance will cover you against any resulting damages. Whether you need product liability insurance and how extensive your coverage should be, will depend on what you manufacture. Some products present more physical risk than others. The physical risk involved with clothing, say, or software is probably minimal.

Professional Liability Insurance: Professional liability insurance helps cover legal damages resulting from the provision of services. In some professions, this is called malpractice insurance. For a doctor, it would protect against damages resulting from unsatisfactory medical outcomes, up to and including the death of a patient. For a lawyer, it protects against claims that legal advice was not sound or that a client was insufficiently defended in court. For providers of other forms of information, it protects against the possibility that incorrect or misleading information caused a client to lose money or make a wrong decision. For the proprietor of a bar or other establishment that sells or serves alcoholic beverages, specialized coverage would cover lawsuits and legal problems resulting from intoxicated patrons or employees.

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