What your company or business does will determine, in large part, what type of liability insurance you’ll require. Every business in the world today has exposure to liability. Some more than others. Have a store? You’ll need premises liability coverage. Have an online store? You’ll need cyber liability coverage. Run an engineering firm? You’ll need professional liability coverage. One of the areas where a commercial insurance expert helps, is in determining what your company’s risks are, and therefore what liabilities your company needs protection against. Sometimes this process can take a bit of time, depending on the complexity of the organization, products or endeavours.
Here are the five most important kinds of liability policies:
Commercial General Liability
Every company should have some kind of Commercial General Liability (CGL). This type of policy will protect your business from bodily injury accidents or death and property damage caused by your business operations. This includes actions your employees take on your business’s behalf. If a product or service your company provides causes damage to another’s property, or causes an injury, and you are found to be legally liable. Then your Commercial General Liability, with the proper coverage’s included for your business, would respond to protect your business by paying court costs, legal defense and payment of judgments against your company. In today’s world court awards are increasing and so it is highly recommended that you have higher liability limits on your policy.
If your company provides specialty advice and services, such as legal or accounting services, computer consulting, medical services, among others then you should have a liability policy in place that specifically covers your professional pursuits. This kind of protection, sometimes referred to as Errors and Omissions Insurance (E&O), covers the costs of defense against any claim of negligence by a client. It also covers the costs of any damages that the court awards to a client, up to whatever policy limit you have on your policy. Professional liability policies are very important as they provide protection in circumstances where the CGL would not. This is because an Errors and Omissions policy is designed to cover claims where you or your business are found to be negligent, which may directly cause financial losses to a client or third party.
Directors and Officers Liability (D&O)
Directors and officers must exercise due diligence when managing the activities of the company, organization, or charity they serve. As a director and officer of an organization you must act in good faith, placing the interest of the organization before your own, and act in accordance within governing rules or laws. Liabilities of Directors and Officers can arise in many different instances, including allegations of breach of common law duties, breach of duties owed to shareholders, and statutory liabilities imposed by federal or provincial law, such as maintaining certain kinds of records. They may be held liable for financial losses, wrongful dismissal, or failure to remediate environmental damages. Because laws are increasingly complex and prone to change it is very important to know that ignorance is not a defense. Having a comprehensive Directors and Officers Liability policy in place protects the Directors and Officers of a company from potential lawsuits as a result of their management decisions.
This kind of liability policy is especially important for manufacturers, gas bars, carwashes or any business that uses or produces chemicals deemed toxic or environmentally hazardous. However, even if your business is to transport something as potentially or seemingly harmless as salt, it could be deemed environmentally hazardous especially if an accident occurs in a protected wetland for example. And, because Canada’s environmental laws have changed to one where the burden of cleanup costs falls on the negligent company, an environmental liability policy is absolutely necessary. Unlike the CGL, environmental liability defines pollution far more broadly. With this kind of liability protection comes the standard defense costs, but also provides clean-up or remediation cost coverage, and can be broadened to include fines too.
The world of the internet is the world of business. Most companies have an online presence and it makes sense to have a Cyber Liability Policy. Certainly, if you store client information on computers connected to the internet, it is extremely important. Data breaches most commonly happen due to human error; leaving a USB storage device in a coffee shop, having physical files stolen from an office, or having your main servers hacked because of obsolete security software. Any company that collects data on their clientele should have a Cyber Liability or Data Breach policy. In 2013, 550 million pieces of identifying information were stolen. And with the average cost of $145 per identifying data stolen a class action lawsuit could have catastrophic effects on your business.
Related Read: Can Cyber Risk Affect Your Business?
Today’s business world is changing at an incredible pace. That’s why with a commercial insurance expert at Erb and Erb Insurance Brokers Ltd. you get someone who will get to know your business, to understand what protection it needs and who will offer the risk management so your business can reduce its exposure to liability. We have great options for all your liability needs, Directors and Officers, Errors and Omissions, Environmental, Cyber and Commercial.
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