Liability Insurance insures against negligence of your business or employees. In other words, it protects your business when it is sued for neglect. Once again, for small businesses, liability insurance is often included in the business owner’s package. You can also get liability insurance through a general liability policy that is separate from the package.

You can have a liability policy that is a claims made policy or an occurrence policy. A claims made policy means that the company that currently insures your business will pay the claim regarding something that happened long ago, even if they were not the insurer at that time. For instance, if you are a builder and a defect is determined 10 years after the construction is finished, your current insurance company will be your insurer.

The occurrence policy means that the insurance company that insured you at the time the problem occurred will handle the claim. In the same example, the builder would be covered instead by the insurance company that insured him 10 years ago.

What is covered and not covered often depends upon the laws of your state. However, all of the following are not covered:

• Injury to a worker
• Damage or loss caused by a company vehicle
• Damage to business property
• Pollution

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