While many of us have heard about liability insurance, most of us don’t really know what it is or if we need it. There are a variety of reasons to have liability insurance as a business owner. In this article, we outline the reasons you should protect yourself with liability insurance.
What is liability insurance?
Liability insurance provides protection against claims resulting from injuries and damage to other people or property, and it covers legal costs and payouts (even if an insured party is not found not liable).
Do I need liability insurance for my home-based business?
The short answer is, yes.
As home-based businesses are on the rise, many business owners and operators incorrectly assume that they are protected by their home insurance. This is not the case.
Your homeowner or renter’s policy may not cover business-related damages, losses to inventory or business equipment, or liability from personal negligence related to your operations, or even your home, if the visitor is a customer.
The Insurance Bureau of Canada states that:
“Liability is perhaps the greatest risk with a home business. Most businesses provide some product or service for which they are liable. For example, a courier may slip and be injured on your icy walkway while delivering a parcel addressed to your home business. If you damage someone’s scalp with a hair treatment in your home salon or if a client trips on the stairs to your basement office, you may find yourself in a legal mess.”
Similarly, if you run a daycare business in your home, having the right insurance coverage, by extending your liability coverage, will help to provide you with peace of mind.
In order to protect yourself and your business, you should have a home-based business package created. These packages start from just less than a dollar a day and include coverage for contents, loss of income, and liability.
What is commercial general liability?
Commercial general liability specifically refers to professional negligence that leads to bodily harm or property damage. This coverage is important for both your employees and any volunteers who act as professionals in their duties for your business. This type of coverage is important for a wide variety of professions from hair stylists to home contractors.
If you operate a non-profit business, you may require additional liability coverages, such as directors and officers liability to protect against allegations of negligence. We recommend that you review all the activities of your business with your insurance agent to determine what coverage you need.
Do farmers need liability insurance?
If you are inviting customers to visit your farm for agri-tourism purposes, which can include tours, tasting, workshops, and more, it is highly recommended that you acquire commercial liability coverage in addition to your farm liability. Your existing farm liability may not respond to damages or allegations of negligence related to your commercial pursuits.
We suggest you review your current coverage with your agent to ensure that all aspects of your business are properly protected. If the commercial activity is not listed under your liability, chances are you don’t have the protection you need.
The team at Dumfries Mutual is here to help you protect your business. If you have any questions about personal or commercial liability insurance, or would like to review your current coverages with your agent, please contact us.