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Small Business Liability Insurance
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What is liability insurance and why is it important for small businesses?

Business liability insurance is any type of small business insurance that protects against accusations that your business caused damages, injuries, or losses.

Liability insurance protects against lawsuits

Even if a business is not directly responsible, a customer could sue over an accident that happened at your shop or office. For example, if a customer slips on a wet floor at your business and gets injured, you could be held liable to pay for medical expenses.

The cost of a lawsuit can devastate a business, even if you are ruled not at fault. That’s why certain types of liability insurance, particularly general liability insurance, are recommended across all industries – especially those that welcome visitors to an office or storefront.

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Liability insurance can protect against:

  • Customer injuries at your shop or office
  • Accidental damage to client property
  • Advertising that damages a competitor
  • Professional mistakes that impact a client
  • Incidents related to alcohol consumption if you serve drinks

When do businesses need liability insurance?

Requirements for business insurance, also called commercial insurance, vary depending on your industry, state, and other factors.

Because accidents can get so expensive, your commercial property manager might ask for a certificate of liability insurance to sign a commercial lease, and clients may request liability insurance in a contract. Learn more about why your commercial lease requires liability insurance.

State laws require commercial auto insurance, which includes auto liability coverage, for business-owned vehicles. It is also mandatory in most states for business with employees to carry workers’ compensation insurance for workplace injury liabilities.

Other types of liability insurance may be required to obtain a business license, such as liquor liability insurance for a liquor license. Learn more about how different types of liability insurance protect small businesses.

Does business liability insurance protect against lawsuits related to the coronavirus (COVID-19)?

Most business insurance policies exclude communicable disease coverage, such as damages related to COVID-19. However, policies such as professional liability insurance and employment practices liability insurance (EPLI) often provide coverage for lawsuits regardless of the cause.

For example, a professional liability policy might cover an expert who missed a deadline due to the coronavirus, while EPLI could cover a wrongful termination lawsuit related to COVID-19. Read more about lawsuits related to the coronavirus.

Small business insurance costs

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Business insurance is a broad category that covers many different types of insurance. Factors that can affect the cost of business liability insurance include:

  • Policy type
  • Industry and risk factors
  • Coverage limits
  • Location
  • Number of employees
View Small Business Insurance Costs

Learn more about business liability insurance

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