In the role of a business owner or entrepreneur, your time and work is usually involved with protecting your company's assets. But in your business leadership role, you could be personally liable for your company's actions. And that could ultimately affect your family's assets, such as your home, your cars and your bank accounts.
Personal liability occurs when damage or an accident happens during the operation of a business, such as injury to a customer and the business owner is held liable for damages. As a business owner, you shouldn't have to worry about personal liability and exposure while running your company. But you can ease that concern if you take the appropriate steps to limit your liability.
There are many business strategies you can pursue to limit personal liability. These range from incorporating your business to keeping business assets separate from personal assets to maintaining accurate financial records. But one of the most important strategies is to have general liability insurance, along with some additional insurance protections.
The most important coverage a business owner should have is general liability insurance. This policy will provide the business owner with coverage and financial protection if the owner, the owner's employees, products or services cause, or allegedly cause, property damage or bodily injury to someone. This coverage gives the owner safeguards should a lawsuit arise or claims be filed for medical and other expenses.
And while general liability is very important for any business, there are several other protections a business owner may want to use, depending on the type of business they have. These include...
Commercial Property Insurance: This will protect your owned or rented facilities and equipment that you use to run your business. However, it doesn't include coverage for flood, which would require a separate flood policy.
Business Income Insurance (also known as Business Interruption Insurance): If you can't run your business because of covered property damage, this policy can help replace your lost income. So you could use this coverage to help pay for ongoing expenses, like rent, utilities or payroll.
Professional Liability Insurance (also known as Errors and Omissions): This will help cover lawsuits claiming that you made a mistake in the services you provided.
Workers' Compensation Insurance: As is required in Florida, you must provide this coverage to give employees benefits if they get hurt or sick from their job.
Data Breach Insurance (also known as Cyber Insurance): This insurance helps your business address a data breach if personal identifiable information gets lost or stolen.
Commercial Umbrella Insurance: This policy will extend the coverage limits for some of your liability policies. So if a claim exceeds the limits on your general liability policy, your umbrella can help cover the difference.
Commercial Auto Insurance: This coverage helps protect you and your employees on the road if you drive company-owned vehicles for business. It can help cover property damage and bodily injury claims from an accident your business causes. This is important because a personal car insurance policy won't cover third-party claims in an accident you cause with a business-owned vehicle.
When owning and operating a business, you always need to keep in mind the potential of personal liability. Taking the right steps in protecting yourself will give you some ease of mind, not only for your day to day business operations, but also for protecting your personal and family's assets. To make sure you do have the protection you need, contact your J.P. Perry agent.