What is General Liability Insurance and why do I need it?

General Liability Insurance protects your business from claims involving bodily injury, property damage, and advertising injury that occur on your premises or as a result of your operations. It’s essential because even a minor slip-and-fall accident can result in costly lawsuits that could threaten your business’s financial stability.

What does General Liability Insurance NOT cover?

General Liability does not cover professional errors or omissions, employee injuries (covered by Workers Compensation), intentional damage, pollution, auto accidents, or damage to your own property or products. These require separate coverage types.

How much General Liability coverage should my business carry?

Most businesses carry $1 million per occurrence and $2 million aggregate, though requirements vary by industry, contract requirements, and risk exposure. High-risk industries or those with significant client interaction may need higher limits.

Does General Liability cover legal defense costs?

Yes, General Liability policies typically cover legal defense costs, including attorney fees, court costs, and settlements or judgments, up to your policy limits.

What’s the difference between personal auto insurance and Commercial Auto Liability?

Commercial Auto Liability covers vehicles used for business purposes, including higher liability limits, coverage for employees driving company vehicles, and protection for various vehicle types like trucks and vans. Personal auto policies typically exclude business use.

Does Commercial Auto cover employee-owned vehicles used for business?

This depends on your policy. A standard Commercial Auto policy covers company-owned vehicles. For employee-owned vehicles used for business, you may need hired and non-owned auto coverage as an addition to your policy.

What factors affect my Commercial Auto insurance rates?

Rates are influenced by your driving records, the types of vehicles, how vehicles are used, annual mileage, geographic location, number of drivers, cargo being transported, and your claims history.

Are rental vehicles covered under my Commercial Auto policy?

Most Commercial Auto policies include coverage for hired (rented) vehicles when used for business purposes, but you should verify this with your policy and ensure adequate limits.

Is Workers Compensation Insurance required for my business?

Requirements vary by state, but most states require Workers Compensation if you have employees. Some states have exceptions for very small businesses or specific industries. Independent contractors typically aren’t covered, though misclassification can create liability.

What does Workers Compensation Insurance cover?

Workers Compensation covers medical expenses, rehabilitation costs, lost wages, and disability benefits for employees injured on the job or who develop work-related illnesses. It also provides death benefits to dependents if a work-related fatality occurs.

Can employees sue my business if they’re covered by Workers Compensation?

Generally, no. Workers Compensation is typically an “exclusive remedy,” meaning employees cannot sue their employer for workplace injuries covered by the policy. This protects both employees and employers.

How are Workers Compensation premiums calculated?

Premiums are based on your payroll, the classification codes assigned to different job types (based on risk level), your claims history (experience modification rate), and your state’s rating system.

What is Inland Marine Insurance?

Despite its name, Inland Marine Insurance covers property in transit over land, mobile equipment, and property at various locations. It’s ideal for contractors’ tools and equipment, valuable inventory being transported, or businesses with mobile operations.

How is Inland Marine different from Commercial Property Insurance?

Commercial Property Insurance covers property at fixed locations. Inland Marine covers property that moves, is mobile in nature, or is at various locations. It “follows” your property wherever it goes.

What types of businesses need Inland Marine coverage?

Contractors, HVAC technicians, plumbers, electricians, IT consultants, photographers, event planners, and any business that transports equipment, tools, or inventory regularly should consider Inland Marine coverage.

Does Inland Marine cover theft of equipment from vehicles?

Yes, Inland Marine policies typically cover theft, including equipment stolen from vehicles or job sites, subject to your policy terms, limits, and deductibles.

What is Professional Liability Insurance (Errors & Omissions)?

Professional Liability Insurance, also called E&O, protects your business against claims of negligence, mistakes, failure to deliver services, or misrepresentation in the professional services you provide. It covers legal defense and settlements.

Who needs Professional Liability Insurance?

Any business providing professional advice or services should consider this coverage, including consultants, accountants, architects, engineers, real estate agents, insurance agents, IT professionals, lawyers, and healthcare providers.

What’s the difference between General Liability and Professional Liability?

General Liability covers bodily injury and property damage from your business operations. Professional Liability covers financial losses clients suffer due to your professional mistakes, negligence, or failure to perform promised services.

Is Professional Liability Insurance claims-made or occurrence-based?

Professional Liability policies are typically claims-made, meaning the policy must be active both when the incident occurred AND when the claim is filed. This is why “tail coverage” is important if you switch insurers or retire.

Pollution Liability Insurance protects businesses from claims arising from the release of pollutants, contaminants, or hazardous materials into the environment. This coverage is essential because standard General Liability policies typically exclude pollution-related claims. Pollution coverage addresses both sudden and gradual pollution events, including soil contamination, groundwater pollution, air quality issues, and improper disposal of hazardous materials.

This insurance is particularly important for contractors, manufacturers, dry cleaners, auto repair shops, property owners, and any business that handles, stores, or transports chemicals or fuel. Coverage typically includes cleanup costs, third-party bodily injury and property damage claims, legal defense expenses, and regulatory compliance costs. Policies can be site-specific or contractor’s pollution liability (CPL) for businesses working at multiple locations. With environmental regulations becoming increasingly strict and cleanup costs often reaching millions of dollars, Pollution Liability Insurance provides crucial financial protection. Even businesses that don’t consider themselves “polluters” can face exposure from historical contamination, fuel tank leaks, or accidental spills during operations.

Cyber Liability Insurance protects businesses from the financial consequences of data breaches, cyberattacks, and other technology-related security incidents. In today’s digital economy, businesses of all sizes store sensitive customer information, employee data, and proprietary business information electronically, making them vulnerable to cyber threats. This coverage addresses both first-party costs and third-party liability claims resulting from cyber incidents.

First-party coverage typically includes data breach response costs, forensic investigations, customer notification expenses, credit monitoring services, business interruption losses, cyber extortion payments, and data restoration costs. Third-party coverage protects against lawsuits from customers, partners, or other affected parties alleging privacy violations, failure to protect data, or transmission of malware. Cyber Liability also often includes regulatory defense costs, as many industries face strict data protection regulations like HIPAA, GDPR, or state privacy laws.

Every business that maintains customer data, accepts credit card payments, or relies on computer systems for operations should consider Cyber Liability Insurance. Cyberattacks are increasing in frequency and sophistication, and even small businesses are targets because hackers often view them as having weaker security defenses.

Builder’s Risk Insurance is a specialized property coverage designed to protect buildings under construction, renovation, or major remodeling. This policy covers the structure itself, materials, fixtures, and equipment being installed during the construction period. Coverage typically extends from the start of construction until the project is completed, occupied, or the policy expires—whichever comes first.

Builder’s Risk policies protect against risks like fire, lightning, wind, hail, theft, vandalism, and other covered perils that could damage the project during construction. The policy can be purchased by property owners, general contractors, or subcontractors, and coverage can be written on a completed value basis (covering the full project value) or a reporting form (where values are reported as construction progresses).

Additional coverages often include soft costs like architectural and engineering fees to redesign damaged work, expediting expenses to speed up construction after a loss, and debris removal. Builder’s Risk is essential for construction projects because standard property insurance doesn’t cover structures under construction, and the exposure during building is significant. Projects are particularly vulnerable due to open structures, valuable materials on-site, and limited security before completion.

Excess and Umbrella Liability Insurance provides additional liability protection above your underlying insurance policies, offering higher limits to protect your business from catastrophic losses. While these terms are sometimes used interchangeably, there are important differences. Excess Liability coverage sits directly over a specific underlying policy and only provides additional limits for that coverage—nothing more. Umbrella Liability is broader, providing coverage over multiple underlying policies (General Liability, Auto Liability, Employer’s Liability) and may also cover some claims not included in underlying policies, subject to a self-insured retention.

These policies are critical because a single severe accident, major lawsuit, or disaster could easily exceed standard policy limits. For example, if your General Liability policy has a $1 million limit but you face a $3 million judgment, an Umbrella policy would cover the additional $2 million. Umbrella policies typically start at $1 million and can extend to $25 million or more for larger organizations.

Most businesses benefit from Umbrella coverage because it’s relatively affordable compared to the protection provided—often costing less than increasing underlying limits. The coverage is particularly valuable for businesses with significant public exposure, multiple vehicles, numerous employees, or substantial assets to protect.

Surety Bonds are three-party agreements where a surety company guarantees to a project owner (obligee) that a contractor or business (principal) will fulfill specific obligations, complete work as promised, or comply with laws and regulations. Unlike insurance, which protects the policyholder, surety bonds protect the obligee (the party requiring the bond). If the principal fails to meet their obligations, the surety pays the claim and then seeks reimbursement from the principal.

There are several types of surety bonds including contract bonds (bid bonds, performance bonds, payment bonds) required for construction projects, commercial bonds needed for business licenses and permits, and court bonds required in legal proceedings. Performance bonds guarantee project completion according to contract terms, while payment bonds ensure subcontractors and suppliers get paid. License and permit bonds guarantee businesses will comply with regulations and ethical standards.

Obtaining surety bonds requires the surety company to evaluate the principal’s financial strength, experience, and capacity to complete the work. Strong financials, good credit, and proven track records make bonds easier and less expensive to obtain. For contractors and businesses in regulated industries, surety bonds are often mandatory requirements and serve as proof of credibility and financial stability.