Just as humans need oxygen to live, businesses need liability insurance to be protected from the unexpected.

When it comes to health insurance, homeowners or renters insurance, and auto insurance, we rarely think twice about ensuring we have adequate coverage. The same is not always true of small business owners and liability insurance. Yet protecting your business from accidents, property or personal damage, and claims of negligence are equally important.

Claims will happen. Are you ready to risk your business being without coverage and protection from financial loss? Without liability insurance, an unforeseen circumstance and the potential for insurmountable debt could literally bury your business.

Being in the insurance industry for almost 40 years working for top fortune 500 companies (i.e. AIG), I have seen firsthand the importance of having a safety net through liability insurance. Insurance companies will provide that “duty to defend” your claim whether you were responsible or not. That is one of the strengths of a general liability policy.

Given my background, I have a good understanding of the various types of liability insurance that are available. For the purposes of this column, I would like to focus on the three most common: general liability, professional liability, and errors and omissions. Although these terms are sometimes used interchangeably, each type is different.

General liability insurance protects you if someone holds you responsible for a certain incident or outcome. This type of insurance covers bodily injury, property damage, medical payments, and advertising injury.

Professional liability is specific to your work or services. Think of it as malpractice insurance for different professions. This type of insurance covers costs and lawsuits, as well as negligence on services, mistakes, or omissions.

Errors and omissions insurance covers you if a dissatisfied client sues your business over a work mistake, oversight, missed deadline, negligence, or undelivered services.

It’s a good idea for business owners to think about their business and what could happen that would require insurance coverage and protection.  This counsel can be from a licensed insurance agent or from online sources. Insurance agents may be able to offer plans from numerous insurance companies, which could help in obtaining the best coverage for your budget.  Business owners can also seek out associations of like-minded professionals for thoughts on policy limits and coverages if needed.

I provide a more in-depth discussion about the various types of liability insurance, as well as what policies cover and do not cover. I also share more insight into the role of the agent/broker and the insurance company.

Learn more about liability insurance at SCORE Bucks County.