Small business is alive and well! I’m working with three new business owners who’ve decided to go out on their own and know they need business insurance to help protect their dream. The new owners include a therapist, a civil engineer, and a new retail store which will sell mattresses. I can’t imagine three more diverse businesses, but surprisingly, there are common themes about their needs. There are many different types of business insurance, however, most small businesses will benefit from two broad categories – general liability and professional liability.
General Liability: The therapist and the mattress retailer have a physical location; the therapist has an office and the mattress retailer a store. Clients meet with the therapist in her office while customers come into the store to shop. In both cases, a general liability policy protects the business owners should someone get hurt during their visit and sues them for negligence.
General liability, often referred to as premises liability is designed to protect a business owner when clients and customers come into their premises. Most retail and office property owners and property management companies require business owners to carry some level of general liability insurance as a condition of the lease.
In addition to providing premises liability, a GL policy may provide additional coverage for office furniture and equipment, store fixtures, and even inventory. Some may include coverage for advertising injury, and may provide optional coverage for employment practices liability. These policies are very flexible and can be tailored to the specific needs of the business owner.
Professional Liability: The therapist and civil engineer also provide a professional service based on training, certification, and ongoing education. They don’t sell a product, just their knowledge and insight to their clients. Professional liability is designed to protect a business owner who provides such guidance and insight. Similarly, people in marketing, consulting, real estate, architecture, engineering, law, insurance, and many other industries require this type of coverage.
Professional liability is designed to protect the person providing the service, advice, or consulting when they make a recommendation which turns out to be wrong or causes emotional or financial harm to one of their clients. For the therapist, doctor, dentist, etc., this is often referred to as malpractice insurance. It is referred to as professional liability or errors and omissions insurance for consultants, architects, realtors, home inspectors, title professionals, and insurance agents.
The civil engineer operates out of a home office and meets with clients in their offices so he only needs professional liability insurance. The therapist, however, needs both kinds since she meets with clients in her office. What kind you need depends not only on what you do, but where you conduct your business!
Which one do you need? Share your questions, comments, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!