If there was a bottom line statement that could be made about why there’s a need for liability insurance, it’s simply this: People find all kinds of reasons to sue someone and so it’s a good idea to be protected, no matter what.
Now, if you would like to explore this matter even further, there are many reasons why not only doctors and lawyers should have liability policies. Suppose you’re a freelancer and someone thinks that you plagiarized their material? (That’s why Copyscape is a great tool to use beforehand.) Or perhaps you’re waiting on an investor to pay you so that you can pay the vendors that you owe—the ones that are tired of waiting for payment and decide to file a judgment? These are just a couple of examples of how liability can even affect a contractor or small business owner.
And if you are sued, here’s something else to consider. If you are a sole proprietor, then you will be the person that is sued solely; however, if your company is an LLC or Corporation, this means that it is what will be what is held responsible for any debt or incurring liabilities. The benefit is that this kind of corporate shield protects all of your personal assets. The con is that it still affects you because it affects your company.
However, if you’re a new business and you don’t have any credible assets, it’s important to keep in mind that there is potential for your personal assets to be attained for up to the next 22 years and so the decisions that you make today are ones that will also affect you in the long-term future. Actually, this is one of the main reasons why people form LLCs or incorporate their businesses; it’s so they can have their personal assets protected. Just in case.
It’s still a good idea to keep in mind is that even with an LLC or Corporation, there are still instances where you can be held personally liable. If you are someone who personally guarantees a loan, if an action that you take results in a client being injured, if you make an illegal business decision or if your personal and business finances operate under the same entity, there are all potential scenarios for which someone can file suit.
And so, as you can see, there’s really no justification (and in many instances and states, even a legal stance) for going without liability insurance. Really, it’s all just a matter of figuring out what kind of policy will work best for you.
Therefore, as you’re reviewing policy cover info, make sure to inquire about three specific kinds. General liability insurance protects you against any kind of injury or negligence claims along with any property damage that many transpire. Product liability insurance is more of a type of product insurance. It protects you against any kind of defective product that may have caused harm to a customer. And finally, there is professional liability insurance that protects business owners from malpractice and negligence suits.
If you’re uncertain about the kind that you (or your company) will need, it’s best to speak with an insurance agent. As it relates specifically to small business liability insurance, there are many websites (like Small-Business.InsuranceQuotes.com) available that will provide you with a list of quotes and companies within your city and state.