New Business Owner? 3 Things You Must Know About Commercial Liability Insurance

Robin Wells

If you are just in the process of starting your own business, it is vital that you get the right insurance. Here are three things that you must know about commercial liability insurance as a business owner. 

#1  You Must Have Commercial Liability Insurance

The first thing that you need to know is that you can't skip out on commercial liability insurance. Depending on where your business is located, you may even be required to have commercial liability insurance; check with the agency where you got your business permit to see if this is a requirement in your area.

If you took out a business loan to start your business, the bank backing your loan may also require that you carry commercial liability insurance as a condition of their loan. It's kind of like how banks require you to have comprehensive insurance coverage when you take out a loan to purchase a vehicle; they want to protect the investment that they have made. 

Even if you are not legally required to have commercial liability insurance, it is still a smart decision. Without commercial liability insurance, if you get sued by someone who sustained an injury while at your business or due to your products, they could put you into bankruptcy and cause you to lose your business. 

#2 Commercial Liability Insurance Will Protect You From A Wide Range Of Situations

Commercial liability insurance will protect your business, you and even your employees for a wide variety of different situations. This type of insurance is designed to protect you from any claims that involve bodily injury to a person or property damage.

Instead of having to break the bank to pay for these claims, your insurance provider will defend you against these claims and will pay any settlements or judgments awarded by the courts, up to the limits of your policy. Without insurance, you would be expected to cover all these costs on your own, which could easily bankrupt your new business. 

This type of insurance typically covers bodily injury that someone sustains while at your place of business or while using one of your products. It also covers any property damage that your business, products or employees inflict on someone else's property. Finally, many commercial liability policies will cover advertising injuries as well. An advertising injury is when another company claims that your product or advertisement violates their copyright. 

#3 Commercial Liability Insurance Has Limits

Although commercial liability insurance will cover you in most instances where any liability issues could arise, it does not cover everything. Here are a few areas that are generally excluded from commercial liability insurance coverage:

  • Liquor: Any issues arising from the consumption of liquor. 
  • Electronic Data: If someone compromises your electronic data, or that of your customers. 
  • Recalls: If a product you issue is recalled for any reason, often times your commercial insurance will not cover the loss the money from the recall that your business experiences.
  • Workers Compensation: Worker's compensation issues and other employment-related practices are not covered under your commercial liability insurance.
  • Pollution: If your business causes excessive pollution, such as leaking oil, your commercial liability insurance may not cover the damage.

Even though your commercial liability insurance will not cover the issues listed above, you can still get insurance to cover you for areas that are excluded. Sit down and examine your business plan in order to determine which of the excluded areas you need to talk to your insurance agent about getting coverage for. 

As you set up your business, make sure that you schedule an appointment with your insurance provider or Ratcliffe Insurance to discuss the different types of insurance you need. Be sure that you fully understand what liability coverage will cover for your business, and make sure you understand any additional insurance you will need to purchase to cover the risks that your particular business presents. 


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