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Quiz Yourself About Your
Liability Coverage
Addressing Two Simple Questions Can Help Prevent Surprises
 In a given five-year period, only about 6% of businesses experience a loss of $5 million or more related to liability claims. But the effect on firms that experience losses of this size is remarkable: On average, they increase their liability coverage to more than three times the average level carried by businesses that have not experienced a similar loss (see chart).
Talk about finding out the hard way that you are underinsured.
Dozens of tasks may seem more pressing than reviewing your business’s liability coverage. Even so, by addressing two simple questions on a regular basis, you may be able to avoid a liability claim that exceeds your insurance coverage limits.
Do you have the appropriate policies? Standard business owners policies include general liability coverage, but they do not cover losses related to professional liability and thus may not protect against the risk of a lawsuit filed by one of your clients.
Errors and omissions liability insurance is one example of a policy that can be designed for risks that are specific to your company or industry. If you employ many workers and offer them substantial benefits, an employee benefits liability endorsement can help pay costs (up to the policy limits) stemming from negligence related to the administration of employee benefits.
Do you have enough coverage? Factors that help determine the appropriate level of coverage can include the size, condition, and location of your premises; the nature of your business and the makeup of your staff; and the size and scope of liability judgments common to your industry.
When evaluating whether you have enough — or too much — coverage, some of the factors to consider are inflation, business growth, changes in the size of your staff, and any developments affecting your industry.
As your business grows and evolves, you may be gaining exposure to new liability risks. We can help review your liability protection on a regular basis to help ensure that you have the appropriate coverage.
1) Insurance Information Institute, 2010
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