Business liability insurance is coverage a company buys to protect itself from losses for which it may be responsible. While it is commonly referred to as commercial general liability, there are subsets of business liability insurance, such as professional liability and products liability. Business liability insurance generally covers injuries to people or damage to property that is the responsibility of a business.
The most basic and common type of insurance related to business liability is premises liability. Premises liability covers instances in which a person is injured while on property controlled by the insured. An example of a premises liability claim would be a restaurant patron slipping on a wet floor and breaking an arm. The restaurant’s business liability insurance would pay for the injured party’s medical bills.
Another common type of business liability insurance is included in a company’s commercial auto policy. Bodily injury and property damage that arise from the operation of a company’s motor vehicle would be covered by the company's auto policy. An example of an auto liability claim would be if a delivery truck ran into a car, causing damage to the car and injury to its driver. The company’s auto liability policy would pay to repair the car and cover the driver’s medical bills.
Professional liability is a type of business liability insurance that protects specially trained professionals such as attorneys, architects, software engineers and accountants. If these professionals make mistakes in the course of their work, those mistakes can cause damage that is not covered under more general liability coverages. Professional liability can also include errors and omissions (E&O) coverage, directors and officers (D&O) coverage, and employment practices liability insurance (EPLI).
Products and completed operations is another such insurance. It protects clients such as manufacturers, installers and restaurants from losses that may be caused by products or work already completed. An example of a product claim would be if automobile brakes were improperly manufactured and then failed, causing an accident. The manufacturer’s liability insurance would pay for any claims related to the accident.
Nearly every company needs business liability insurance to protect itself from lawsuits and losses. Many consumers, vendors and corporations require that the companies they do business with carry business liability insurance specific to their particular operations. To conduct business, many companies are required to show proof of liability insurance through certificates of insurance that are issued by the insurance carrier.