Personal liability insurance

Do You Need Personal Liability Insurance for Your Business?

Everybody, whether they are business owners or not, should be covered by personal liability insurance.

While it won’t cover business activities, business owners can use it as a safeguard for their finances and business assets. For example, if a neighbor went onto your property and got injured, your personal liability insurance would cover it. That way, you wouldn’t be completely wiped out if the neighbor decided to file a lawsuit.

Found in renters insurance and homeowners policies, personal liability insurance protects individuals and families from accidents that occur to people in and outside of their homes. It’s also a safeguard when someone visits your house and something they owned was damaged because of or on your property.

When you have personal liability coverage, you are guaranteeing that all your startup’s assets are safe and that you can continue functioning as a business owner.

If you want to purchase additional business-related coverage, you should seek out general liability insurance. The kind of coverage you have under your general liability insurance will depend upon what type of company you’re running.

Related: Professional Liability Insurance: Your Legal Safety Net?

What type of general liability insurance do you need?

  • If you have sole proprietorship of your business, your general liability policy will cover you and your spouse as individuals
  • If you are an S Corp, the policy will automatically cover you, your stockholders and your officers. That means if a customer goes into your restaurant, spills hot coffee all over herself and wants to sue your whole company, everyone will be protected
  • If you have an LLC, your members and managers will also be covered under general liability insurance

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What does general liability insurance cover?

General liability and personal liability insurance mostly cover the same things, just under different circumstances. Specifically, general liability will protect your business in these areas:

  • Premises: this covers most injuries that occur on your company’s grounds. It also covers things that get damaged due to negligence on your part. For example, you would be covered if part of the ceiling fell in while customers were present, or a rack of inventory collapsed and damaged objects that didn’t belong to you.
  • Operations: if you send out contractors or employees to complete jobs and someone gets injured, or property is damaged, you are protected. For example, you’ll be covered if your pool service contractor accidentally causes damage to a customer’s backyard fence while he’s at their home to clean the pool.
  • Products: this covers items that you make and sell that customers use off of your premises. If any of your products cause damage, you’ll be covered. If customers are using products in your store or on location, the premises clause may cover any injury or damages.
  • Completed work: if the condition of your finished work created damages or injured somebody, you’ll be covered. For example, you’d be protected if you repaired a car but didn’t install the brakes correctly, and the customer ended up getting into an accident because of it.

Personal liability insurance is a crucial part of protecting your business. It works hand in hand with general liability insurance to safeguard you against lawsuits, so you’ll be set up for success.

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