10 Tips for Small Businesses Looking for Commercial Liability Insurance

Small businesses are the backbone of the United States economy. According to recent studies, small businesses account for more than half of all private-sector jobs and over 60% of net new jobs since 2000. Despite their importance, many small businesses lack essential protections like commercial liability insurance, also known as “business insurance”. Keep reading to learn our top tips on how to find and secure the right business insurance for your organization!

10 Tips for Small Businesses Seeking Commercial Liability Insurance

1. Understand What This Type of Insurance Is

Commercial general liability insurance is a form of insurance that covers bodily harm, personal injury, and property damage caused by the company’s operations, goods, or injuries that take place on its premises or wherever the company’s services are performed. It’s comprehensive. It does not, however, cover all the potential risks that a company might face. This type of insurance policy is essential for small businesses, as it can help protect you from costly legal fees and damages.

Not having it could be the difference between staying in business and being forced to close your doors. Some examples when you might need this type of liability protection include: 

  1. A customer trips on damaged flooring onsite at your business and is injured
  2. Your employee accidentally leaves the water running in your customer’s home, causing damage
  3. A lawsuit is filed against your business regarding a misleading advertisement

2. Understand What Business Insurance Covers

When shopping for commercial liability insurance, it’s important to understand what is and isn’t covered by the policy. Business insurance generally provides coverage for any legal expenses that may arise due to an accident or injury that occurs in the course of your business. Business insurance provides protections that arise from:

  • Bodily injury
  • Property damage
  • False arrest
  • Copyright infringement
  • Products-completed operations hazard
  • Advertising and personal injury liability
  • Medical payments
  • Wrongful eviction

3. Understand What Business Insurance Doesn’t Cover

It may seem like business insurance is pretty comprehensive. However, several situations are excluded from its protections. Some common exclusions include damages arising from:

  • Property damage
  • Injury or illness of employees
  • Sexual harassment or discrimination
  • Libel, slander, or defamation of character
  • Oral contract promises
  • Personal auto policies
  • Representations
  • Unfair competition
  • Warranty work

4. Compare Quotes From Different Insurers

When shopping for commercial liability insurance, it’s important to compare quotes from different insurers. This will help you find the best coverage at the best price. To get started, gather quotes from several insurers and compare them side-by-side. Be sure to look at the coverage offered by each policy and the price tag.

In addition, it’s important to understand that the way a policy is put together may be different for different insurance companies. You’ll want to work closely with your insurer to ensure you’re comprehensively covered in all situations that make sense for your industry. You’ll also want to ensure you’re not paying for coverage you don’t need.

5. Make Sure You’re Fully Covered

This type of insurance can be customized to your needs, therefore, it’s possible to miss certain types of important coverages if you’re not careful. There are a few things you can do to make sure you’re getting the most out of your policy. First, review your policy regularly and update it as needed. Also, make sure you have adequate coverage for both your business property and your employees. Talk to an insurance agent about adding additional coverage, if needed.

Also, make sure your policy includes coverage for all of your business activities. And, make sure that you accurately list all entities and locations. Ask about additional endorsements that can help offset some unexpected expenses, such as auto breakdown, medical payments, false arrest/imprisonment, product recall costs, employment practices, liquor liability, and other situations. Review your claims history to ensure you are getting the best rates possible. Finally, keep in touch with your agent so to address questions as they arise.

6. Ask About Discounts

When looking for commercial liability insurance, it’s important to ask about discounts for bundling your policies with one insurer. This can save you money and make the process of obtaining insurance simpler. Bundling your policies with one insurer can also have other benefits. For example, if you have a property insurance policy as well as a liability policy, you may be able to get a discount on your property insurance.

It’s also important to ask about other discounts that may be available to you. For example, many insurers offer discounts for good credit or for being a member of a professional organization. By asking about discounts for bundling your policies and for other good behaviors, you can ensure that you’re getting the best deal possible.

7. Read the Fine Print

It’s critical to read the fine print carefully, as some policies may have specific coverages or limits that apply to different situations. Make sure you understand what exactly is being covered and what’s not. And be sure to ask your insurance agent any questions you have about the policy. Once you’ve chosen a policy, be sure to read the terms and conditions thoroughly. Ask about exclusions, deductibles, and co-insurance. These terms will vary depending on the insurer, so be thorough.

Some policies may require a specific deductible for property damage, while others don’t. Your policy may be limited to damages that arise from accidents that occur on your premises or the locations where the business conducts its operations. In addition, business insurance should have a provision for additional insureds. Additional insureds may be covered by your policy in certain circumstances – like employees and suppliers. You can add additional insureds either by endorsement or as part of a separate agreement.

8. Purchasing Business Insurance

Commercial liability insurance is available as a stand-alone policy, as part of a Business Owners Policy, or as part of a Commercial Package Policy. Talk to your insurer about the type and amount of coverage you require. If your general liability policy, Business Owners Policy, or Commerical Package Policy does not create enough coverage, consider purchasing a commercial excess (umbrella) policy to safeguard yourself against financial loss. See the next section for more information.

9. Purchase Additional Coverage If Warranted

Finally, you might want to consider taking on additional insurance coverage from other types of policies. You may also consider purchasing business liability insurance before opening, expanding, or remodeling your business. For instance, take advantage of an umbrella policy if needed to protect you from catastrophic events or financial losses.

Errors and Omissions Insurance

This type of insurance is another professional liability insurance that can help protect you from financial losses such as lawsuits related to contracts, clients, and intellectual property claims. It specifically protects against claims of negligence or inadequate work arising from a contract. This type of policy usually covers the legal costs associated with the claim, which can rack up quickly and be quite costly. Even if a baseless claim is made, this can protect your organization.

Directors and Officers Liability Insurance

Directors and officers liability insurance protect directors and executives of for-profit or not-for-profit businesses from claims resulting from alleged or actual wrongful activities they may have committed in their jobs. The policy covers any real or claimed error, misstatement, omission, misleading statement, or breach of duty, as well as some policies’ inclusion of employees.

Pollution Liability

Business, commercial, and agricultural property owners, managers, and developers may benefit from this form of coverage since it provides them with a wide selection of pollution liability protection for both gradual as well as sudden and accidental first-party and third-party environmental liabilities. It also protects assets from unanticipated environmental risks that might have a big financial impact. Furthermore, it protects against unknown pollution hazards that may result in bodily injury, property damage, or pollution cleanup expenses.

Liquor Liability

Liquor liability insurance protects your business from claims filed by customers who become intoxicated and hurt themselves or others as a result of their intoxication. If your company sells, serves, or enables the purchase or use of alcohol, it is likely to require liquor liability coverage. This coverage can be purchased as an add-on to a commercial liability policy or as a stand-alone product.

10. Choosing the Appropriate Deductible

Due to cost savings, it might be attractive to go for the lowest deductible. However, don’t fall into this trap. The lowest deductible does not necessarily offer the best cost savings strategy. Premiums will rise with lower deductibles, so the best approach is to choose the highest deductible that your organization can absorb.

Taking the time to find the right business insurance policy is well worth it in the long run. Protect your business and yourself with the right coverage. Reach out to the experts at ISU Armac today and you’ll be glad you did! We’re dedicated to our customers and believe in creating long-lasting relationships. Our staff can help create a tailored insurance plan for your budget and we’ll work with you to ensure you have all the necessary protections in place!

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