Understanding Business Liability Insurance Coverage
April 18, 2023
Texas has the ninth-largest economy in the world, beating out most states and even most countries around the world. This means the Lone Star State is a haven for business start-ups.
Texas alone, among all 50 states, doesn’t even mandate that employers carry workers’ compensation insurance; nor does it mandate any other type of insurance for businesses operating here.
Without insurance, however, you’d risk losing your business and maybe having your personal assets seized if something happens that is traceable to your enterprise. For instance, you operate a pet store, and a customer slips and falls on a slippery floor and is injured. The average injury claim comes in at $20,000 or more.
Injuries are not the only claims that customers, competitors, and others can make against your business that can be costly. If your marketing or advertising causes reputational harm to another person or business, you can be liable for that as well. If you sell products and a defective product causes injury, that party could come after you as well.
It is highly recommended that anyone operating a business in Texas purchase business liability insurance that fits your business and protects you against claims that can ruin your enterprise and maybe even cost you financially if your business assets don’t cover the claim.
If you’re operating a business, or thinking of operating a business, in or around Stafford, Texas, or anywhere in Fort Bend County, contact the business litigation attorney at The Parzivand Law Firm, PLLC to discuss the proper insurance options for your type of business.
If you’re already running a business and have filed a business liability insurance claim that has been denied or given the runaround, contact the firm as well, and let them pursue an appeal or further negotiations with the insurer.
What Is Business Liability Insurance?
Business liability insurance is protection against financial losses by your firm due to property damage, bodily injury, and personal injury from libel or slander.
If your business is a sole proprietorship or a partnership, you or you and your partners can be held personally liable, meaning you could lose personal assets if a claim exceeds your business’s ability to pay for it. In a limited liability company (LLC), the members (owners) are largely shielded, but the business itself could go under if it can’t pay for a claim. Insurance is vital.
A general business liability insurance policy will thus cover you and your business for:
Costs for property damage claims against you and your business
Medical expenses if someone is injured (besides an employee) on your premises
Administrative costs involved in your claim
Court costs, judgments, and settlements for covered claims
Note that general business liability insurance covers only third parties, not you or your employees. For your employees’ physical well-being, you should purchase workers’ compensation insurance unless you want to be personally liable as a person or a company.
Remember also that with any liability coverage, there are caps on how much the insurer will pay out for a claim. You can, of course, purchase higher limits, but then the premium will also be higher. In addition, though your policy will cover any reputational damage you cause to others, it will not cover false advertising.
Types of Business Liability Insurance
In addition to general liability insurance as described above, other types of liability insurance may be needed depending on the type of business you’re operating.
For instance, if you run an accounting firm, you may need to purchase professional liability insurance, also known as errors and omissions insurance. If you end up making an accounting error that costs your client IRS fines or other difficulties, you could be liable. A close cousin of this type of insurance is data breach or cyber security insurance.
If you own or rent your place of business, you should also consider commercial property insurance, which covers damage to your property. Remember, general liability insurance covers only third parties, not you. Commercial business insurance should also be considered if you use expensive equipment in your business. Many commercial policies do not cover equipment.
Finally, for claims that exceed the caps on your general or other business liability policy, you should consider a commercial umbrella policy. This can extend the limits on your policies.
What About Disputes and Claims Denials?
Insurers are for-profit entities, so they’re not just going to rubber-stamp every claim. They will conduct their own due diligence, which generally means questioning you thoroughly and requiring you to submit substantial evidence to justify your claim. In other words, it’s not that unusual for your liability insurer to stonewall, delay, or even deny your claim.
If that happens, you need to keep the lines of communication open and come up with whatever they say is insufficient and needs clarification or proof. It is also possible to file an appeal. A last step is civil action, but you need to read the terms and conditions of your policy carefully.
Your policy generally gives your provider several reasons for denying a claim, and a civil suit should be based on bad faith tactics by the insurer. It’s going to be difficult to show bad faith if they’re exercising their rights as stated in your policy.
Diligent and Strategic Representation
For all your business insurance questions and concerns, including claims denials, in the Greater Houston area, contact the business litigation attorney at The Parzivand Law Firm, PLLC.
The firm will provide personalized attention to all your needs and represent you aggressively in any dispute with an insurance provider. Reach out immediately.