There are three types of liability insurance you should be familiar with as a business owner:
- General liability insurance is the main type of liability protection for your business. It protects you from having to make large payments in the case of injury claims, property damage, libel/slander, advertising claims, and other lawsuits. Depending on your type of business, this may be the only kind of liability insurance you purchase. It usually covers the damages and legal costs that result from a lawsuit.
- Product liability insurance protects you from financial loss that results from producing and selling a defective or inadequately tested product. If your business involves manufacturing or selling products, you may need product liability insurance to protect you in the event someone becomes ill or injured as a result of using a product you make or sell. The riskier the product your business provides, the more liability insurance you will need.
- Professional liability insurance protects you against malpractice, errors, omissions, and negligence that could arise when you perform a service. Some states require professional liability insurance for certain professions, such as general contractors, doctors, or architects.