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Employer
Liability Insurance
What you need to know
to stay
protected
Employer liability insurance is critical
to organizational success. As a business owner, you must
carry many types of insurance in order to adhere to legal codes as well
as to protect yourself from financial disaster.
One
of the
most important is liability insurance. No matter the size of
your business, liability is a must.
What is
Liability Insurance?
Employer liability
insurance protects you and your company from being held legally
responsible in the event of an injury or personal loss caused directly
or indirectly by your actions.
For example, if you
deliver a
product and a defect causes injury to an individual, you can
potentially be held responsible – even if the incident is years down
the road.
The Types of Employer Liability Insurance
There
are two main categories
of liability insurance. These are:
Basically,
the two types differ in the time period that the insurer is responsible
for handling the claim.
- With “claims
made”
insurance, your
insurer at the time that a claim is made will be responsible for
handling the claim.
- Even
if the claim was a result of work
that was done years prior when you had a different insurer, your
current insurer will be responsible for the claim.
- “Occurrence”
liability insurance puts responsibility on the company
that insured you at the time of the occurrence. If mistakes
don’t become visible immediately, a significant period of time can pass
before a claim is made.
- Even
if you do not have the same
insurer, they will be responsible for handling the claim retroactively.
Depending
on your policy, the definition of occurrence can change, so it is a
good idea to read the worded language carefully before buying your
liability insurance.
Limitations
- It
is important to understand the difference between liability insurance
and other types that you may need. For example, injuries to
your employees would be covered by workers’ compensation insurance, not
liability.
- Also,
property damage to your business would not
be covered by liability, nor would automotive accidents.
- Basically,
employer liability insurance is meant for third-party individuals who
are affected by your actions in a negative way. Your business
and your employees require separate forms of insurance.
Coverage
- Most
larger companies will likely have separate policies for each type of
insurance that they carry. But if you own a smaller business,
you will likely be able to bundle most of your insurance together with
one company.
- Many
insurers offer small business insurance
packages that cover liability, property, and workers’ comp through one
policy. This can be a great way to simplify your employer
liability insurance
needs while making sure all you needs are covered.
- Plus,
bundling your insurance into one package can probably save you a bit of
money, making it less of a financial burden on a small company.
The
type of employer liability protection you choose may depend on the
service that you
provide.
If you are a home builder, then you will probably
want to go with “claims made” insurance, as there may be defects that
don’t come to light for a long time, complicating your insurance
situation.
If your mistakes will likely be visible
immediately, then “occurrence” insurance will probably be the best fit.
For more information regarding employer liability
insurance, please be sure to check out the following
sections:
Similar
to employer insurance, employees also have responsibilities
and rights. To learn more about this, check out the employee rights
section.
And don't forget to check out the various employment
background screening
sections, especially if you are interested in federal government jobs.
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