Operating a business is not just about planning, goal-setting, and seeking profits. Every business owner has to acknowledge the fact that some unanticipated situations might occur within the business premises. Unfortunately, some situations may cause bodily injuries or property damage and can lead to lawsuits that would, later on, affect overall business operations.
As a way to reduce these uncertainties and be able to maintain financial stability, most entrepreneurs appreciate the necessity of having insurance coverage.
To help you ascertain what works best for your company, let's talk about the two most suitable insurance types for situations involving accidents, property damage, and bodily injuries—premises liability coverage and general liability coverage.
It is understandable why most people get confused about the difference between premises liability and general liability insurance since both seem to be applicable for the same types of situations. However, it must be clear that these two are not the same.
While both arise from scenarios involving accidents or when a person gets injured on someone's property, it can't be said outright what liability has occurred.
Adequate due diligence on the part of the business owner is a huge factor used to determine whether the incident should fall under premises liability or general liability. If it is proven that the property owner didn't exercise reasonable care, then the accident would be accounted for under premises liability. Otherwise, it might be considered as general liability.
Premises liability arises from injuries and property damage resulting from the owner's negligence. Property owners must financially compensate the injured person when it is proven that they didn't observe legal requirements or proper maintenance to ensure the safety of the property.
In other words, they will not be automatically held responsible for accidents that cannot be reasonably anticipated in the first place.
As the name implies, premises liability covers accidents that occurred on your business premises. It arises when a guest, a licensee, or a customer encounters an accident like slipping on the floor or tripping over something within your workspace.
Business premises are where your work takes place, including your office building, pathway leading, and office parking lot. However, common areas such as entrances and hallways might not be considered your responsibility. But if you are leasing out a property, it's best to know which areas that require supervision or a certain standard of care from you.
This coverage helps cover costs arising from claims due to bodily injuries, reputational harm, advertising injury, copyright infringement, and property damage. General liability, also called commercial general liability coverage, is a practical choice for small business owners who may not have the financial capability to recover from losses because of costly claims.
The rules regarding premises liability are complex. When victims suffered relatively minor injuries to catastrophic injuries, they have the right to claim premises liability damages. This would include medical costs and lost income due to the inability to work.
Take note, however, that premises liability is only applicable to accidents within the property where the owner has the responsibility to ensure safety.
Every business insurance policy helps mitigate the risks that will potentially affect your business. However, a certain type of insurance might appear to be more beneficial to one business and not really to other lines of business. It is important to determine your business risks first to know what policies you need.
As a business owner, you must ensure that your business is adequately insured. Thus, here are some of the factors that you shouldn't overlook so you'll end up choosing the right liability coverage:
To be able to choose, look at what types of insurance policies are available. Among all the options, general liability insurance is highly recommended when it comes to small businesses—and it is also legally required. Typically, it covers injuries, damage, and reputational harm. Take note, however, that this type does not cover employee illnesses and injuries. In that regard, what you need is worker's compensation insurance.
Additionally, it cannot also protect you from claims arising from errors or omissions. Instead, omissions insurance or professional liability insurance will help cover the costs and expenses.
Depending on the nature of your business, you may also pick some types of insurance that are deemed necessary in providing you financial security. You can choose from renter's insurance, commercial auto insurance, or property insurance. If you think you can go for a bundle, you must contemplate that too.
Having inadequate insurance can put your business at stake. Meanwhile, buying more than what need will not be good as well. To ensure that you are getting the best out of your money, reach out to an insurance agency. Insurance companies can help evaluate your risks as well as your needs and come up with a plan.
Before suggesting any liability policy, the insurance company might be needing details about your business and a list of possible events that could lead to losses.
Always remember that a trustworthy and reliable agent would know and understand your situation first before advising you to purchase a certain kind of liability policy.
Now that you already understand what options are available, it's time to have an in-depth look at how one differs from the rest. Though some policies are quite similar in a few aspects, several deviations would make you think twice.
One example is the comparison between premises liability coverage and a general liability insurance policy. While both pertain to a liability arising from accidents or injuries within the business location, certain major conditions make them wholly unlike.
The latter provides blanket protection for common torts, which in fact includes premises liability cases. But the former gives a higher amount of coverage when purchased separately. Thus, in choosing between the two, you need to weigh up where you would benefit more.
Liability insurance is your way to avoid the crippling financial impact of being found legally liable for injury or damage. Liability policies cover any legal costs and payouts involved with bodily injury or property damage.
General liability insurance is a type of business owner's insurance that covers common lawsuits and accusations. It protects against customer injuries, damaged customer property, defamation, or copyright infringement.
Current liabilities are the money owed for operating expenses such as accounts payable, wages, and taxes. In addition, payments on the long-term debt will also be listed in current liabilities, which typically represent salaries or maybe even income tax that is due next year.
Malpractice, a form of professional liability coverage, covers bodily injury or property damage that arises from services provided by professionals while working on projects. Professional insurance—a type of personal policy—protects against injuries sustained during activity outside your profession.
Rent paid for space not yet occupied would be recorded as an asset on the balance sheet under prepaid expenses and then recognized as an expense when the business occupies said space.
Having a premises liability policy and a general liability insurance policy both offers numerous benefits for business owners. At the end of the day, choosing between getting one or both depends on the needs of your company. Don't forget to review each policy coverage before you sign on to ensure you're making the best choice.
Learn more about business insurance when you explore the resources available at Assured Standard!
