Liability Insurance Key Terms

Know the language of insurance to keep choosing coverage from becoming a liability

Accidents happen. That's why it's important to prepare for the worst. All business owners should protect their livelihood by selecting the right liability insurance coverage appropriate for their business. Insurance representatives can evaluate your needs, but it's your responsibility to have all your bases covered.

Choosing the right liability insurance can be complex and intimidating, especially if you don't know the jargon. Get to know the terms you'll be encountering when comparing policies and reading the fine print, so you can acquire adequate coverage.

General liability insurance

Business owners must protect themselves from general claims of liability, or fault, that arise out of ownership of property, such as customers falling in the parking lot or damage caused by an employee. A general liability insurance policy covers these everyday instances.

Umbrella liability insurance

A so-called umbrella liability policy, as its name suggests, covers many "leaks" not addressed by your general liability coverage. Umbrella liability coverage is most commonly needed in situations considered "catastrophic"; it helps pay the bill when the general liability insurance runs dry.

Business owner's policy (BOP)

Instead of buying several small policies, a business owner can purchase a business owner's policy that covers a variety of situations. Many small-business owners find business owner's policies to be particularly simple and inexpensive compared to other options.

Commercial package policy (CPP)

Unlike the prepackaged BOP, a commercial package policy lets the policy holder customize the coverage to meet unique needs. A CPP provides two or more different forms of insurance, usually set at a lower premium for buying them together.

Employment practices liability

An employment practices liability policy protects your business against sexual harassment, discrimination and wrongful termination lawsuits or any other claims by employees that their rights were violated.

Cyberspace liability

Computer losses and other Internet issues are covered under cyberspace liability. Intellectual property rights as well as software and hardware data losses can be covered. Check to make sure your general liability insurance policy doesn't already cover this aspect of business.

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