Myths and Facts About Business Liability Insurance Part 1by A. Montalbano on 08/23/15
You think your business is fine on your opening day of your newly found operation. Your product is line up, your staff is in place, and you got your website reeling in traffic. On that glorious busy day, something awful takes place. A customer slips and falls or the waiter carrying a tray of hot enchiladas slips and empties the enchiladas on a customer's lap. You move quickly into action to make the situation less than alarming. The customers come out ok and you return to the tasks at hand thanking your lucky stars the customer is fine. Two months later you receive a summons for a lawsuit in regards to this situation. Now your business and reputation is at stake. With no liability insurance to protect you, attorney fees, court room costs and the liability costs which liability insurance can protect in all these areas at up to $1 million, comes out of your pocket.
We have listed myths and facts associated with business liability insurance where new business owners tend to speculate whether to purchase now or wait.
1. Myth: A start-up business doesn't need insurance until its first customer.
FACT: If you tend to put too much faith in luck your business is aimed to fail from the start. Think of every business transaction as a risk waiting to happen which means shutting down your business dream for good.
2. Myth: Business Liability Insurance is too expensive.
FACT: Nothing is more expensive than a million dollar lawsuit. If your rate appears too high for your start-up or even after being 3 years in business, get 3 more quotes. AGIS has the carriers and for those hard-to-place businesses, shopping it is never a burden.
3. Myth: If someone tries to sue, I can readily purchase liability insurance for my business and they will take care of the claim.
FACT: Not even close. The claim happened before your insurance effective date, you had no insurance on the day the claim was made therefore, your business is not covered.
4. Myth: I don't need insurance to cover my one helper.
FACT: Bogus again. Your helper may be your cousin or your neighbor but if they are injured while "helping" your business, they don't have to be an employee, they just need coverage in the event something happens. Workers comp, period.
5. Myth: My personal auto insurance will cover my helper when they drive my car or van to deliver goods I sell.
FACT: Using your auto for business errands or company tasks must be covered under commercial auto. Especially when allowing a helper or employee utilize your car for any business related work is a sure bet to risk your business. Getting sued by the helper/employee if they get hurt or if they hurt others can happen. Just because commercial auto sounds expensive, its not much higher than personal auto, it gives you more flexibility.
6. Myth: Nothing will happen to my business since I provide a service.
FACT: SOOO untrue! A service is not only a transaction, it carries just as much liability as a product does because human error is a major component. Even if your business is about consultation, professional liability insurance needs to be in place.