Which Types of Liability Insurance Does Your Business Need?


Did you know that a customer who has suffered bodily injury or incurred character damage because of using your product can need compensation equal to tens of thousands of dollars? If the court makes you pay this compensation, you may be forced to sell your company’s assets and to close your business. Liability insurance is designed to help you avoid this. There are three types of liability covers which provide protection. Use some functional advice to determine which ones you will need.

Product vs. specialized Liability Insurance

There is always the risk of a customer getting injured, incurring character damage or losing money because of using your product or service. In this case, the person will require compensation. There are two types of covers which you can be used for financial protection in such situations. The first one is the product liability cover and the second one is the specialized liability cover also known as indemnity cover.

The product cover is designed for physical goods. These include all types of manufactured products from home appliances and clothing to processed foods. If you make or sell such products, you will need this kind of liability insurance.

The indemnity cover is designed for professionals who offer specialized sets. The list includes medical doctors, lawyers, accountants, brokers and financial advisors, architects, engineers, designers and advertisers. Tradesmen such as plumbers, electricians, hair stylists and pet groomers also need to use this kind of cover. It provides protection in case of claims resulting from negligence, errors and omissions.

Public Liability Insurance

This kind of cover is mandatory for all businesses including home-based ones. It is designed to provide protection in case a member of the public makes a claim for compensation against your company. Basically, you will get protection in case of general claims made by members of the public who may or may not have a business relationship with you.

For example, if you provide HVAC repair to residential customers and you break a valuable object while working in a client’s house, then you will be able to use the public liability cover to compensate this person. If you accidentally cause damage to the HVAC system while working, this will be regarded as specialized error and your indemnity cover will kick in.

Finally, you should keep in mind that the commercial auto insurance is also a kind of liability insurance. You are legally required to cover all vehicles which you use for commercial purposes.

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