Is Your Business Protected? 5 Things To Know About Business Liability Insurance

Building a business is a fantastic achievement. But protecting that business is something that you might not think much about. Until, of course it’s too late! That’s where business liability insurance coverage comes in handy.

But just like every asset you’ve got–health, car, life–your business needs a backup plan in the event of a worst-case scenario. 

(Not that you wish for them, and not that you need to fear them. But you DO want to be prepared for anything. That’s good sense!)

So what kind of business liability insurance coverage should you consider? Do you already have policies in place, and are they the right ones for your situation? Will they cover you as you uplevel your business? 

Or, what if you have no insurance at all and have no clue what you might need?

I get questions like this a lot. I’ve jotted down a few tips to help you determine what kind of liability protection you might need. I want to help you ensure you’re ready for any kind of unexpected circumstances. So let’s move ahead and see what applies to you!

Layering in liability protection for your business is based on these factors:

1-Establish a business entity (if you haven’t already). For example, create an entity like an LLC or a Sole Proprietor. To separate personal from professional liability, you need to create a business entity.

Be sure to also have an Employee Identification Number (EIN). This saves you from having to associate your Social Security number with your business. It’s an additional layer of separation that will make your life a lot easier in the long run. 

2- Include Clear and Solid Contracts. Include aspects like “act of God,” confidentiality, and payment structures in your client contracts. Also be sure that your contracts include partnership agreements and wills. These two aspects cover what to do with the business in the event of the business owner’s death. 

3- Beef up your employee benefits. This covers things such as business owners who are on payroll. It also covers unemployment insurance for employees, workers’ compensation, and short-term disability benefits. (Find out more about payroll taxes and the benefits of paying them on THIS post! Or, if you’re already in the market for a payroll provider, check out my favorite one, Gusto, right HERE).

4- Life insurance. Include this for key employees or partners in the business. This is important to have in the event of a key player’s death. A life insurance policy will help buy out shares or replace the income they created until their position can be filled. 

5. Liability insurance. From my personal perspective, I’d recommend two things. First, D&O insurance, which helps with lawyer fees if you’re ever taken to court. Second, liability insurance that covers things like workplace falls and faulty equipment. 

Now, only a liability insurance representative can give you liability specifics for your industry. So get in touch with someone, find out what kind of liability insurance applies to your business, and go from there. 

Incidentally, in my experience, business liability insurance falls under that old saying that it’s better to “have it and not need it than to need it and not have it.”

Even if you don’t think it applies to your industry, do yourself a favor. Speak to a liability insurance specialist, and find out what policies might give you some peace of mind!

Bottom line–don’t get caught flat-footed! A little bit of prevention goes a LONG way in your business. Look at your situation, see which of the above applies to you, and take action to keep your business well-protected.

Until next time,

Love, Light, and MONEY, Honey….

Kaylee