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    Public Liability vs General Liability Insurance

    Public Liability vs General Liability Insurance

    You can use liability insurance to cover settlement fees if your business is legally responsible for causing third-party physical injuries. Liability insurance has several policy variations, with each one providing different coverages. You need to understand the legal implications behind each policy to utilize the benefits of liability insurance.

    A good starting point for every SMB is distinguishing the nuances between public liability insurance vs. general liability insurance policies. Remember: many businesses get tricked into getting additional insurance coverage they don't need. Apart from the excess premiums, the lack of a comprehensive insurance policy compromises daily business operations.

    What Is the Difference Between Public Liability Insurance vs General Liability Insurance?

    General and public liability insurance both cover the legal responsibilities associated with physical injuries. However, they have varying limitations. Public liability insurance covers third-party injuries sustained by office visitors or shop customers. In contrast, general liability extends to the on- and off-premise claims made by employees, visitors, and customers.

    Policy premiums vary based on several factors dictated by your insurance company, but general liability insurance cost estimates often exceed public liability premiums. In some cases, by more than double the amount. Unfortunately, not many budding entrepreneurs can afford the excess premiums—thus forcing them to rely on public liability insurance.

    What Is General Liability Insurance?

    General liability insurance covers a wide range of claims, ranging from intellectual property litigation to personal injuries. Unfortunately, the comprehensive coverage also comes with a steep price. Smaller businesses with limited funds can opt for less broad coverages, like PLI, negligence claims, or workers' compensation.

    What Is Public Liability Insurance?

    Public liability insurance covers physical injuries sustained by third parties while they are on your business premises. Covered third parties include office visitors, customers, clients, and delivery personnel.

    Quotes vary based on your preferred insurance company, but in most cases, public liability insurance premiums do not cost much. Their affordability makes them a suitable policy for low-budget startups. We highly encourage brick-and-mortar businesses that have visitors entering and exiting their premises regularly to invest in public liability insurance as soon as possible.

    What Are the Limits of Public Liability Insurance?

    The caveat is that public liability insurance is limited to public claims—which means your insurance company will only accept claims made by the general public. If a company employee or investor gets into an accident, you will have to pay the fees out of pocket.

    Thriving businesses should seek professional advice from their insurance company regarding their growing insurance needs. Boost your coverage once the projected expenses exceeding policy limits spike to several thousands of dollars.

    What Type of Insurance Does Your Business Need?

    A first-time small business owner might find the sheer number of insurance options on the market confusing. Liabilities covered range from third-party bodily injury to business property damage. While every policy has its significance, you only need options that cover liabilities applicable to your business activities. Overall, the goal is to identify which coverages will protect your business.

    Don't worry if you have never purchased insurance before. You can streamline the shopping process by focusing on the following criteria:

    Legal Requirements

    Most states require businesses to carry some form of insurance. Entrepreneurs should familiarize themselves with their local government's insurance guidelines. For example, the legalities vary on a case-by-case basis, but worker's compensation is mandated for business entities with at least one employee. This policy supports employees suffering from work-related injuries.

    While the government does not mandate general liability or public liability insurance, consider at least the former if you regularly transact with walk-in customers. Ensure that you have protection against third-party claims of accidents within your premises. Remember: settlement amounts could skyrocket upward of $75,000.

    Apart from the state-mandated guidelines, consider which policies would make your customers feel at ease. Depending on the services you offer, clients might prefer insured workers. For example, architects will encounter several clients who prefer licensed businesses backed by professional liability insurance policies.

    Common Industry Risks

    SMBs should not limit themselves to state-mandated insurance coverages. The business insurance you need heavily depends on the industry risks you face. Do not forgo purchasing additional insurance if it will help mitigate industry-specific complications.

    We stated earlier that clients might prefer architects who carry professional liability insurance. Why? Several factors come into consideration. However, professional liability generally protects both the client's and architect's best interests. This policy covers damages stemming from professional errors—which could have settlement fees totaling several grand.

    Apart from architects, professionals that may benefit from professional liability insurance plans include:

    • Engineers
    • Auditors
    • Accountants
    • Financial advisors
    • Real estate brokers
    • Company consultants

    Premium Costs

    While having multiple insurance plans to cover legal responsibilities and shoulder unprecedented legal expenses might seem nice, not every business owner can afford the premiums. Several startups operate underinsured to save on premiums.

    We understand that the lack of funds can hinder you from purchasing sufficient coverage, but do not proactively avoid insurance. Once profits start rolling in, consider adding insurance to your monthly expenses. Otherwise, your business will be at risk. Even low-cost employee injuries like slips and falls can add up to over $40,000 in legal costs, attorney fees, and settlement costs.

    Don't neglect cybersecurity insurance policies! Assured Standard shares that several businesses—from small startups to large institutions—have suffered from cloud security failures in the past.

    Frequently Asked Questions

    Should a small business have liability insurance?

    General liability is a must for any business. This comprehensive policy protects against common incidents, including bodily injuries and property damage.

    What happens if your business does not have business insurance?

    The main risk of operating a business without any coverage is that you may not have the funds to replace or repair damaged property, pay compensation for injured people and employees, or continue generating revenue.

    How much does public liability insurance cost for a sole trader?

    A public liability policy could start as low as $450 and go up to $10,000 depending on the extent of your coverage.

    Does general liability insurance cover lawsuits?

    General liability insurance is a type of business owners insurances that covers common lawsuits and accusations. It protects against customer injuries, damaged customer property, defamation, or copyright infringement.

    Can anyone get public liability insurance?

    Public liability insurance is a crucial part of running any business, but it's especially important for small businesses. The cost of public liability could be enough to bankrupt your company if you're not careful.

    Do you need a public liability or general liability insurance policy? The latter provides extensive coverage and protections, but small business owners might not have sufficient funds to support the costly premiums. In these cases, most businesses can start with the cheaper alternative: public liability coverage.

    Apart from these two policies, larger businesses should also seek expert advice regarding personal injury, workers' compensation, product liability insurance, and professional liability coverage. While you cannot wholly eliminate liability risks, you can protect your business with the right insurance policy. Mitigate potential damages by investing in sufficient coverage beforehand.

    Are you worried that cloud-based systems might not offer sufficient in-team data privacy? Assured Standard can help! Check out our quick guide on how to maintain identity management in cloud security.

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    Assured Standard will protect your business with the right insurance, depending on your needs. Now more than ever, it’s crucial to have the right general liability insurance experts on your side. Protecting the future of your business starts today.
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