04.27.08
Liability Insurance – What’s It All About?

We often read stories in the news about someone suing a company because of a mishap and later awarded a significant financial settlement.   Liability insurance protects a business’ assets in such cases, whether for something it may have done (or left undone) which results in an injury or property damage.

How much coverage do you really need?  That depends largely on two factors, first being the amount of perceived risk.  A company which does business with lots of people or heavy equipment is more likely to face a lawsuit than one which doesn’t.  Secondly, the state in which you do business is a key component.  Quite simply, some states tend to award higher damages to plaintiffs than others.

With liability insurance in place, the insurance company would cover compensatory and general damages.  Punitive damages are not covered.  Policies state what the maximum amount the insurer will pay out during the term of the policy, and may also include a maximum amount per occurrence.  If these limits are deemed to be insufficient, an umbrella liability policy can be purchased.

What can be done to reduce the risk of a liability claim?

· Set high standards for product quality control.

· Make sure all company records are complete and accurate.

· Be sure all employees are properly trained.

· Get safety tips for your type of business from your insurance company.

From AllBusiness.com as reported in the San Francisco Chronicle.