Businesses need to protect themselves with insurance. Among your coverage should be general liability insurance.
Liability coverage comes in many shapes and sizes. You should work with your agent to set up a policy that targets your budget, specifically. Still, even so, the policy will still come with various costs. How do you keep them manageable?
Liability Insurance in a Nutshell
A liability is the risk you pose to someone else. Liability insurance, therefore, helps you compensate someone you harm. It’s easy to see why businesses need this coverage. Should a third party, like a customer, sue you for damage, you might have to pay up.
Let’s say someone falls and sprains their ankle while visiting your store. They might sue the business, or request help covering their lost wages or medical bills. With liability coverage, you can get the money you need to pay the affected customer for their losses. This coverage can be a good thing. The company shouldn’t have to pay 100 percent out-of-pocket for accidental damage.
The Costs of Liability Coverage
Even with a solid liability insurance policy, you don’t assume you won’t have to pay anything for your coverage. No policy is airtight. There will almost always be prices you must pay.
- Some general liability policies have deductibles, while others don’t. This is the price you pay for damage before your policy will provide payment. At times, requesting a deductible for your policy might save you money on your premium costs. This can be an important savings tool. Ask your agent if you can add one.
- Most liability policies will have exclusions. Exclusions are incidents of damage that receive no coverage. You’ll have to pay the full cost of these damages unless you have additional insurance for those losses.
- All policies will come with coverage limits. This is the maximum amount of money you can receive in the event that you make a policy claim. Usually, limits start at around $1 million in coverage and can increase from there. If you have a claim that exceeds your maximum coverage limit, you’ll only receive the maximum, at most. That means you could face costs if you don't have enough coverage.
Because limits might still lead to out-of-pocket costs, talk to your agent about how to reduce them. Your agent can likely help you choose effective coverage limits that won’t drive up your policy costs. That way, your business will have effective financial security in more than one way.