Through the everyday operations of a company, small businesses face a variety of potential risks, including liability lawsuits which can catch a business owner by surprise. Even if the lawsuit is frivolous or you are not at fault, you could still be subject to costly litigation.
In today's business world, especially with new technology, there are more and more opportunities for a business to be sued, from a data breach to server outage to even a car accident. However, businesses can take precautions to reduce risks through business lawsuit insurance.
The most common types of lawsuit liability coverage include the following...
General Liability Insurance - This type of insurance, which is considered a basic need for any business, covers the cost of lawsuits brought by people outside of your company. It covers bodily injury, property damage, copyright infringement and defamation. This policy is often required in client contracts and for leases and mortgages.
Errors And Omissions Insurance (E&O) - Also known as professional liability insurance, this policy is a key line of defense in protecting a business from third-party lawsuits involving mistakes, negligence and professional oversights. It covers work errors, undelivered services, missed deadlines, budget overruns and breach of contract.
Directors And Officers Insurance (D&O) - This policy protects members of the board of directors and corporate officers against lawsuits related to decisions they make on behalf of the company. It covers items such as employment practices, mismanaged funds, failure to comply with corporate bylaws, failure to comply with industry regulations, intellectual property infringement, libel and more. Most likely a candidate for your board of directors will want to know you have this policy in place before they agree to serve.
Employment Practices Liability Insurance - This coverage will protect a business against employee lawsuits involving discrimination, harassment or other acts that infringe on employee rights. Coverage usually includes claims of wrongful termination, breach of employment contracts, and mismanagement of employee benefits. This type of policy is more important depending on the number of employees you have.
Hired And Non-Owned Auto Insurance - This type of insurance protects business owners from lawsuits involving accidents with leased and personal vehicles used for business purposes. It covers bodily injury and property damage liability. This policy is important if your employees use their own vehicles to service clients. However, don't mistake this coverage for commercial auto insurance, which is for company-owned vehicles.
Cyber Liability Insurance - This coverage pays for costs related to various cyber incidents, such as data breaches that causes issues at your business or your clients'. It covers legal costs for damages that include customer breach notifications, finding and fixing security flaws, regulatory fines and penalties, credit and fraud monitoring and more. There are two types of cyber insurance policies: first-party cyber liability insurance, where the policy covers the cost of data breach or cyberattack against your system or network; and third-party cyber liability insurance that pays for lawsuits related to a data breach or other incidents that harms your client.
The business world is a minefield when it comes litigation involving a business. That's why it is important to have your J.P. Perry agent review your business operations to recommend the best means to protect you company.