Liability insurance is an insurance policy that protects businesses against mishaps that might take place during their operations. These mishaps include injury to a client or employee, damage to client property, and lawsuits filed by clients on the grounds of financial loss, among others. There are three liability insurance types, each responsible for protecting a business during such situations. This article discusses four things you need to know about liability insurance for your business.
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1. What are the liability insurance types?
As mentioned, there are three types: general, professional, and employer. Each of these is discussed below in brief:

• General
  This type of liability insurance coverage protects you against property damage to your customer or clients, mistakes in advertisements, physical injury to clients, or reputational damage faced by your business.
• Professional
  As the name suggests, this liability insurance type is specially made for businesses that provide professional services to clients. It can protect you against claims made for negligence on your behalf, providing incomplete information leading to your client’s financial loss, and so on. This insurance covers the resulting legal fees.
• Employer
  This type of liability insurance cover helps you deal with situations when your employees get hurt, injured, or ill because of your business, either due to the job role or at the worksite.

2. What does liability insurance cover?
The insurance policy covers property damage, physical injuries, and the cost of defending your business, as discussed below:

• Property damage
  If your customer or client incurs any property damage due to your employees’ or your mistake, the liability insurance coverage will protect you.
• Physical injury or damage
  If your customer incurs any physical damage at the workplace, the insurance policy will cover the treatment costs. Fractures, serious injuries, and diseases due to fume or smog exposure are some liability insurance examples under this category.
• Cost of defending business
  The insurance will cover the cost to defend you in court, should you ever face any legal charges. Attorney fees, courtroom booking costs, administrative costs like medical bills, receipts, and so on are a few liability insurance examples that can be claimed.
  

3. Is this insurance mandatory?
Businesses don’t necessarily need liability insurance coverage. However, the policy protects you against any costs and damages that you might incur in the future. It is especially beneficial for high-risk industries since any mishap or lawsuit can take a severe toll on the company’s reputation and finance.

4. How much does liability insurance cost?
Many factors determine the cost of liability insurance. High-risk companies like those offering construction or repair services will be charged more than low-risk companies with minimal chances of fatalities in the workplace. Other factors include:

• The number of years you have been in the industry
• The size of your business (small businesses are charged lesser)
• The location of your office or offices
• Your company’s insurance history
• The number of claims made
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Having liability insurance may not be mandatory by law. But it is a necessary feature to safeguard your business and continue its smooth functioning.