Commercial Liability Insurance Can Save A Company

Commercial liability insurance is financial protection for any business or commercial endeavor against the catastrophic cost of damages for which the company could be held liable. In the event of an accident, mishap or unforeseen event, in which the company carrying the liability insurance is at fault, the insurance may pay for the actual damages suffered by the other party as well as any punitive damages claimed by the other party that is associated with the case. Commercial liability insurance could even pay for court costs and other legal fees. Simply put, without commercial liability insurance, a company could suddenly be wiped out or forced into bankruptcy due to what may appear to be a relatively minor mishap or accident. That is why in many states, businesses are required to carry commercial liability insurance.

The insurance company underwriting the liability insurance policy covering the insured business employs a team of experts to determine the “risks” the insured company or business venture may be exposed to due to the type of business they are conducting or the type of employees they are required to hire.

An accounting firm, for example, has a different set of “risks” for an insurance company to cover than a private investigations firm. Generally speaking, private detectives – who may also be licensed to carry weapons – have a higher risk of encountering a violent element that could require the use of the weapons carried by the private investigators than a group of accounts who spend most of their time crunching numbers. However, accounts have a higher risk than private investigators of making a mathematical mistake that could cost their client serious money.

On the other hand, take the example of a small retail business, such as a bridal boutique, that might inadvertently use an advertising slogan which has been copyrighted by another business. The boutique owner most likely has a “general” liability insurance policy which usually includes “general” coverage such as “bodily injury” coverage, in case a patron slips on the silk material of a wedding gown she is trying on and falls – or “property damage” coverage, in case the boutique’s delivery van carrying the bridal gown and the bridesmaids’ dresses hits a pillar at the church and causes the roof over the front door to collapse – or “advertising injury” coverage for that inadvertent use of another businesses copyrighted slogan.

All three types of businesses share the common element of having “risks” as part of their day-to-day operations. But the different types of “risks” require different types of liability insurance coverage. And even though many insurance companies can and do sell liability insurance directly to their client companies, when considering commercial liability insurance, the company management buying the coverage would do well to discuss its needs with an insurance broker or agent. Brokers usually represent many different insurance companies. As independent parties, they can help the company management decide which insurance coverage and insurance company would be best for their particular needs and type of coverage.