Small Businesses Need Liability Insurance

Today many small businesses are popping up.  The reasons for this vary.  Many want to be their own boss, some people are creating their own job since they are unable to find one or many corporate companies are encouraging their employees to become 1099 consultants to help save on benefits.  Either way, people are setting up on their own and it is to these people that I write this blog article.  

Start up costs are a difficult things to manage when you are just beginning your business.  Many demands are placed on your budget but one thing I would encourage you to put top on that list is liability insurance.  All business, big or small, should have liability insurance to both protect the business itself and its customers.  Here are four reasons I would strongly recommend liability insurance even for theone person shop.

1) Contracts:  Contracts are king these days.  Customers require contracts to do business with you.  In many contracts you will see insurance requirements so it is best to have that in place at all times to be able to meet those requirements, especially if you are bidding for a job.  Many start up business work out of their home but for those that lease space elsewhere you will find insurance requirements in your lease contract that need to be met.

2) Slip and Falls:  As I write this article Ohio is dealing with cold weather, snow and ice.  Already claims are coming in where people have slipped and injured themselves outside of businesses.  Whether you are negligent or not in these situations there is still a cost to defend yourself when someone comes to your door on crutches handing you their medical bill from the fall they took on your premises.  

3) Product Liability:  Retailers who sell products have the exposure of something going wrong with their products and causing injury.  Especially if your product is used in cooking or toys for children, this risk is always there and could be very costly.

4) Property Damage to Others: Contractors face this risk the most.  If you are mowing a customer's yard and cause rocks to damage near by cars or houses you will be liable to pay for the damages.  If you are a contractor working on a customers building and end up damage a portion of the building you are not working on, that damage will be your responsibility.  

These are just four examples of where businesses risk having claims.  Each of these would be covered by a general liability policy setup for your business.  Be sure to consult with an independent agent that can help pinpoint the type of coverages that best suit your business and stay protected from unexpected expenses.

Products and Completed Operations Hazard

If you manufacture, sell or distribute a product, there is a possibility that the use of the product could cause bodily injury. The example everyone thinks of is a stepladder. Next time you are at the home improvement store take a look at all the warnings that ladder manufactures put on their product. Who really needs to be told not to stand on the top rung of a ladder? But, it is because of the product liability hazard that manufacturers feel it is necessary to include so many warning with their products. Even if you are not the manufacturer, and simple sell someone else’s products, you could still be liable.

The second part of this coverage is completed operations coverage. If you install or repair products such as a heating system, you could be negligent should damage be caused by your work after you work is done. Let’s say that you installed a new furnace in a restaurant, and later that day a fire ensues. The fire marshal determines that product literature that was left inside the furnace caught fire further melting a plastic cover causing black smoke to spread throughout the premises. The business had to close until repairs and cleanup could be completed. A substantial amount of money was lost and the cleanup was in the thousands of dollars.

Both of the situations cited above would be covered if your policy includes products and completed operations coverage. Not sure if your package includes this coverage; give us a call to review.