What Does Liability Insurance Actually Cover?

Owning and operating a business can come with unforeseen expenses, such as liability claims. Many businesses are unprepared to cover these costs, even though liability claims are unfortunately quite common and usually result from normal business operations. Having liability insurance coverage can keep your business from having to pay these costs out of pocket. Read on to find out what types of claims liability insurance can protect you from.

What Does Liability Insurance Actually Cover?

Sensible risk management strategies are a must for business owners, as it’s essential to keep your business protected from unnecessary expenses. Though there are many perils associated with business ownership, the number one way to keep your business protected is to ensure your business is properly insured. When you’re unexpectedly hit with a liability claim, insurance can be the difference between your business coming out on top or facing financial ruin.

Liability coverage is an excellent ally in keeping your business protected because its coverage extends to multiple facets of running a business. Claims related to injuries on your premises, damage to your client’s property, or even allegations of copyright infringement and false advertising are all covered under this type of insurance – and these are just a few examples! Liability is the type of insurance you need in your corner for mitigating all the risks of business ownership.

What Types of Claims are Covered by This Policy?

There are many situations in which your business could be held responsible and expected to pay for. Proper insurance coverage prevents you from paying these various costs out-of-pocket. This type of insurance includes coverage for expenses, such as legal and medical expenses, as well as compensatory and punitive damages related to the following types of claims:

Bodily Injury 

Bodily injury coverage provides protection against losses for bodily injury to others (including clients, customers, or employees) that may have been caused by your operations. Whether you’re found liable for bodily injury due to non-professional negligent acts or due to your premises or business operations, this type of insurance can cover medical expenses and legal expenses associated with this type of claim.

Bodily injury includes physical and/or mental injuries to a client, customer, or employee that may have been caused by your operations, including emotional distress. Common bodily injury lawsuits include customer slip and falls (ex: a customer slips on loose or wet flooring while visiting your business and is injured), and other tortious acts that may cause a claimant to suffer loss or harm, such as intentional infliction of emotional distress, and negligence.

Property Damage

Property damage coverage, like bodily injury coverage, provides protection against losses from the legal liability of your business for property damage occurring due either to non-professional negligent acts or arising out of the premises or business operations. In the event that your business causes property damage, including employee accidents, this insurance will cover the costs of the damage.

For example, if your employee accidentally breaks a client’s windows while working at their home, the cost of the damages will be covered by your insurance. Another example would be if your employee leaves the water running at a client’s home and causes substantial damage; without insurance, your company would be expected to pay for the costs of this damage. However, having insurance means your employee’s mistakes won’t cost you any extra coin.

Product Liability

Product liability is essential coverage for manufacturers and any businesses that sell goods. While we know customer safety is always a priority, sometimes bodily injury or property damage can occur due to an unfortunate product malfunction. Product liability will cover the costs of any claims related to bodily injury or property damage caused by a product you sell or manufacture.

Tenant Liability

Tenant liability protects your business from damage to property that you lease or occupy for business purposes. This protects you against the day-to-day risks of running a business within a rented space, including lawsuits and payments of claims related to third-party bodily injury or property damage. It’s common for landlords to require proof of insurance before renting out a space, so having proper coverage is an asset when looking for a new home for your business.

Personal Injury, Advertising Injury, and Reputational Harm

Liability coverage keeps you protected in the event of personal and/or advertising injury claims made against your business. You’d be surprised how easy it is to find yourself facing an advertising injury claim; saying something untoward about a competitor to the wrong audience, for example, could result in being hit with a defamation lawsuit. Similarly, making grandiose claims in an ad campaign could see you facing a class-action lawsuit for allegations of false advertising.

Personal and advertising injury liability protects your business against a range of offenses, such as:

  • Libel
  • False advertising
  • Slander
  • False arrest
  • Defamation
  • Malicious prosecution
  • Wrongful eviction
  • Wrongful entry
  • Invasion of privacy

Copyright Infringement

In addition to advertising injury claims, this type of insurance protects you from lawsuits alleging the unlawful use of another’s advertising idea or copyright. Copyright infringement occurs when someone else’s work is used on your product or in your business’ ads without the express permission of the copyright holder. If your business is found infringing on another’s copyright, your liability coverage will cover the cost of damages and legal fees.

Other Costs Covered by a General Liability Policy

In addition to these specific types of claims, a general liability policy will help to cover the administrative costs associated with handling all the covered claims described above. The amount of coverage for these costs will vary, as they depend on the limits of your specific policy. Additionally, this type of policy will cover smaller medical claims that do not require litigation and a variety of costs related to legal defense and the process of litigation.

Medical Payments

A general liability policy offers limited coverage for medical payments, including payments for injuries sustained by clients or customers that were caused by an accident taking place on the premises of your business or when exposed to your business operations. Medical payments coverage does not require legal action to be accessed, meaning your business is able to settle smaller medical claims promptly and without litigation.

This type of policy will cover all necessary and reasonable medical expenses accrued by a person injured or killed in an accident that takes place on your business premises or arises from your business operations. This includes surgical costs, ambulance fees, hospital fees, professional nursing expenses, and funeral expenses. Since medical payment coverage is provided on a no-fault basis, there is no defense or legal liability coverage.

Legal Defense Costs

Liability insurance will cover all legal fees, including court costs, legal defense, judgments, and settlements for the above types of claims. On your behalf, your insurance will pay all damages if you are found liable (up to the coverage limits of your policy). Your policy will also cover the costs associated with administrative work and legal secretaries.

Complementary Policies

While this type of insurance covers a wide range of expenses, there are certain additional policies you’ll need to purchase to ensure your business has complete coverage. Workers compensation, employment practices liability, liquor liability, pollution liability, and professional liability may be beneficial complementary policies for you. Talking to an experienced insurance professional can help you to determine which endorsements are right for your business.

What Type of Businesses Need General Liability Coverage?

No matter the size of your business, or your industry, you can benefit from general liability coverage. This type of insurance is especially beneficial for businesses with locations that are accessible to the general public, as well as businesses that:

  • Work directly with customers and/or clients
  • Manage client-owned property and/or assets
  • Rent or own commercial space

Independent contractors and entrepreneurs can also benefit from this type of insurance, as they can also be held liable for the same injuries and damages that general liability policies cover. Liability claims can be extra difficult for independent contractors and entrepreneurs because they’re solely responsible for their finances. Choosing not to properly insure a sole proprietorship can, unfortunately, lead to significant financial hardship and even bankruptcy.

What You Risk When You Remain Uninsured

If someone files a claim against your business, the cost of legal defense and court fees can add up quickly. With the additional costs of administrative work, legal secretaries, and any associated costs from judgments or settlements, your business can be stuck footing an extremely expensive bill. We’re talking hundreds of thousands of dollars! A general liability insurance policy is essential for helping your business cover these costs.

General liability insurance is the most important insurance coverage for your business to have. A lawsuit can have an immense negative impact on a business; without proper insurance, facing a claim of any kind can place a tremendous financial strain on your company’s bottom line. Because liability suits happen so frequently, you need a good insurance plan in your corner. Visit ISU Armac today to pair your business with the best agency for all your insurance needs.

How Do I Get California Home Insurance in High Fire Risk Areas?

Coverage for an accidental fire is one thing, but what if you happen to own a home in a geographical area that is at higher risk of wildfire than other parts of the country? Is coverage for wildfire damage part of your insurance policy? Understandably, many people who live in California and other western states are very concerned with fire risk home insurance since wildfires are worsening due to the impact of climate change. The good news is that it’s easier than you think to have coverage for your home in case of wildfire damage.

How Do I Get California Home Insurance in High Fire Risk Areas?

Many homeowners are surprised to learn that coverage for fire damage, including damages caused by wildfires, is typically part of a standard homeowner’s insurance policy. That’s right – instead of searching for a specific policy to add to your existing insurance, your first step should be going over your current policy and inquiring about the coverage that already exists. The chances are high that your current policy already covers all fire damage.

Of course, if you need to find affordable home insurance for your homeowner’s insurance policy, then you may need to do some additional legwork. If you don’t have insurance yet, then your goal will be to find an affordable policy for your area that will offer a well-rounded policy plan that includes fire damage coverage. Some tips to find a good plan include:

Verify Company Covers Your Area

The first thing you will need to do to find affordable home insurance for your property is to narrow your search by insurance companies that cover your area. Typically, it’s a good idea to try for a local insurance company or at least a company that primarily serves your state, as the policy plans will be tailored to the needs of homeowners in your area.

If you can’t find a local insurance company that you like, you may want to branch out to national insurance companies. But be aware that smaller insurance companies typically have better rates, which might be better for your bottom line. It’s also worth noting that you may have additional steps to take if your homeowner’s insurance policy is tied into your monthly mortgage payments; in that case, you may be better off tailoring your existing policy.

Get and Compare Multiple Quotes

The best way to find an affordable plan is to gather multiple quotes and compare what your estimated monthly payments will be. In general, homeowner’s insurance policies in California are a bit pricier than insurance in other states, simply because California is a more expensive state to live in. The average homeowner pays about $1,200 annually for home insurance in California.

Of course, several factors will influence how much your home insurance policy will cost. For example, the lot size of your property, the value of your home, and even the age of your home are all factors. The most influential factors are the amount of land you own for your property and the overall value of your home since these are the base values that your insurance policy will need to cover in case of catastrophe.

Find Policy Plan That Meets Your Needs

The final tip to keep in mind is to find a policy plan that meets your specific needs. In some areas of the country, coverage for flood damage is not included in a homeowner’s insurance policy, even if the home is in a high flood-risk area. That said, most homeowners insurance policies cover all types of fire damage, including accidental damage and wildfire damage.

But you may want additional coverage, such as for earthquakes, which is also a common risk for California homeowners. In fact, the California Earthquake Authority estimates that only 10% of California homeowners have earthquake insurance despite California having a very high risk of earthquake damage. Homeowners in the Bay Area, in particular, may want to look for policies that also offer this type of coverage.

Is Fire Risk Home Insurance More Expensive in California?

Although the average monthly cost for home insurance in California is around $100, if your area has a higher risk of wildfires, then your premium may reflect this. Compared to other states, there is a steeper price for a homeowners policy in California, particularly the portion of the insurance policy dedicated to fire insurance premiums.

The reason why fire insurance premiums are steadily rising is that wildfires are becoming more common, more damaging, and harder to fight off. Naturally, because home insurance companies will need to cover that damage, the collective price for your policy rises to reflect the amount of damage your home may incur after a wildfire. The more likely your home is damaged by fire, the higher your premium will be. The same can be said for drivers who have repeated accidents.

Do All California Homeowners Need Fire Risk Home Insurance?

The cost of fire insurance included in your homeowner’s insurance policy varies greatly in different areas of California. For example, the central valley in California has the lowest risk for wildfires, so insurance policies tend to be cheaper in these areas. Areas of California that see wildfires more often, such as the dense forests in NorCal, will generally have a higher premium since wildfire risk is much greater.

That said, it’s rapidly becoming clear that larger and larger swathes of California are at elevated risk of wildfires, so even areas that do not seem likely to have a fire could be affected in the future. Such is the case for areas like Paradise, which faced extensive loss with homeowners who were underprepared for potential fire damage. In any case, it’s important to double-check that your fire damage policy explicitly states that it covers wildfires, as well as fire damage.

What Will Fire Insurance Cover?

Now that you know what fire risk home insurance may cost in the long run, it’s time to get down to the brass tacks of what this type of policy will cover. In general, fire insurance will cover any type of property damages caused by fire, as well as other financial losses associated with a fire. For example, repairing your home, replacing damaged property, and paying for hotel fees while your home is being fixed can all be covered by fire insurance.

However, just like any other insurance policy, there are some things that your policy may not cover – so if you fall under certain circumstances, you will need to talk to your insurance company about extending coverage. For example, if you have detached structures on your property, such as a garage or a shed, these structures will not usually be covered automatically by your fire insurance policy. Always ensure that every part of your property is covered by your insurance policy.

How Does the Claim Process Work?

If your home has been damaged by a wildfire, then you will first need to file a claim with your insurance company. The claim process can be started on the phone, online, or in person. The sooner you start the claims process, the sooner you can benefit from your insurance coverage, such as using your policy for temporary housing.

After you file your initial claim, evidence of your claim will be collected. This will include photos to document property damage, a claims adjuster assessing the damage in person, and the insurance company reviewing the evidence to make an estimate for your claim. Overall, this process can take several days or weeks. If you aren’t satisfied with the estimate your insurance company offers, you should contact your claims adjuster or insurance agent directly for negotiations or an explanation of the estimate.

Can You Purchase Additional Fire Insurance?

Yes. If you aren’t satisfied with the basic coverage that is bundled into your homeowner’s insurance, you can always purchase extra fire insurance coverage for additional detached structures, or even extend the type of fire damage your policy will cover. While accidental fires, electrical fires, and wildfires may be covered, your insurance plan may not cover specific types of fires, such as gas explosions.

It’s also important to understand the details of when your fire insurance policy is active. For example, your insurance will not cover damages to a home that has been vacant for more than 30 days in a row when the fire happened. If you want coverage for property that isn’t being continually lived in, such as a vacation home, then you will need additional fire insurance.

For California homeowners, it’s abundantly clear that wildfires are placing more homes at risk every year – and that means that homeowners need to be prepared with fire risk home insurance policies to cover any damage associated with wildfires. The good thing is that coverage for wildfire damage is likely already part of your homeowner’s insurance policy, so you may only need to double-check your policy. For more information about fire risk home insurance in California, please contact ARMAC Insurance Services in Victorville, CA today.