Safeguarding Your Business with Insurance

Business owners form LLC’s or corporations in order to shield themselves from personal liability, but many are left unsure of what to do about business liability.  What if a customer trips and falls on the business premises?  What if an employee sues the business, claiming some sort of wrongful conduct?  What if a customer or client makes a claim about the products or services of the business?  Even though the formation of a corporation or a limited liability company offers the small business owner substantial protection from personal liability, most business attorneys and advisors strongly recommend adequate insurance coverage as well.

There are a number of different types of insurance available, so it is imperative for a business owner to contact a qualified business insurance broker to be advised about what forms of insurance are advisable.  Every policy has important elements such as policy limits (i.e., the maximum it will pay), included and excluded items (i.e., what is covered and what is not), and a deductible (i.e., the amount the insured entity must pay before coverage is provided).

Here is a general outline of the most common forms of business insurance.

1. Comprehensive General Liability (CGL) Insurance.  These policies generally provide coverage for activities NOT related to the products and services of the business but rather for general kinds of liability such as personal injuries of a customer visiting the office.
2. Fire and Extended Peril Insurance.  These policies cover the value of property owned by the business against loss by fire and other destruction.
3. Errors and Omissions (E&O) Insurance.  These policies cover liabilities created by the errors and omissions of people who represent the business in the performance of its business activities (e.g., malpractice insurance carried by lawyers and doctors) and they are specific to each field of business.
4. Products Liability Insurance.  These policies cover liability for any products the business produces that then injure customers or others.
5. Employment Practices Liability Insurance (EPLI).  These policies cover claims made by employees who believe they have been the subject of wrongful conduct by the business.
6. Workers Compensation Insurance.  Almost every California employer is subject to the California Workers’ Compensation laws that require it to carry such a policy (or, to self-insure, as described in the law).  The laws subject an employer to liability for industrial accidents, regardless of the employer’s negligence, while at the same time precluding employee lawsuits which might result in large damage awards.
7. Unemployment Compensation Insurance.  California employers are required to carry unemployment compensation insurance and to register with the California Department of Employment Development.

The main focus of business lawyers is minimizing risk and exposure to their business clients.  These various forms of insurance are a key weapon in the arsenal of the business and its attorney for addressing the liabilities they face in conducting their activities.

If you own a small business or a mid-sized business in the San Francisco Bay Area and you need help protecting your business, contact Jeffrey Miller to find out how he can help you.  (650) 321-0410 or [email protected].