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What All Small Businesses Should Know About Liability Laws

Businesses are often the target of lawsuits. This is driven both by the nature of business operations and the fact that businesses are perceived as having the money necessary to pay large settlements. You should not only assess your business’s liability before you start the business, but periodically, as your company grows and is exposed to more liability.

Insurance Is Essential
The best tool for protecting a business against liability is liability insurance. Some forms of insurance are required by law. For example, employers must carry worker’s compensation insurance. However, there are also forms of liability that may also be necessary.

General Liability Insurance Is Recommended
Generally, businesses should carry general liability insurance. This can cover:

  • Medical costs incurred by those injured on your property
  • Legal settlements after you are successfully sued
  • Damages caused to a property that you are renting
  • Claims of libel or slander
  • Claims of misleading advertising

The #1 reason why you should consider getting insured is that it doesn’t cost too much, which makes it a wise investment. It is especially important that you purchase general liability insurance if you live in a state where it is likely that the courts will award damages or if you are in an industry where you are much more likely to be sued. For instance, a building contractor is much more likely to be sued than a consultant.

Purchase More Specialized Insurance Policies
In addition to general liability insurance, it makes sense to purchase additional liability insurance depending on the type of industry you are involved in. If you are bringing products to the market, it would make sense to purchase product liability insurance for additional coverage. If your company instead provides services to customers, a better option would be to purchase professional liability insurance. This plan protects your business from litigation related to errors or malpractice. To determine what coverage you need, find out what general liability insurance covers and where the gaps are.

Hire a Lawyer
If you are concerned about whether your business is at risk of liability, it may make sense to hire a lawyer to consult with you. The larger your business becomes, the more it may be necessary to hire an employee with paralegal online degrees not only to ensure that your company is covered, but to make sure your business modifies its operations to reduce risk.


As part of becoming a more protected and well-rounded business, you need to think about liabilities you face. Use this guide to decide what insurance and legal investments you should spend in.

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