Charles Spinelli: When Is Liability Insurance Needed?

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Charles Spinelli: Who Needs Liability Insurance?

Liability insurance is a product that protects against claims resulting from damage to other people or property. Liability insurance covers any legal expenses an insured party is responsible for if found legally liable. Intentional damage is typically not covered in liability insurance policies, notes Charles Spinelli. 

Unlike most types of insurance, liability insurance pays third parties and not policyholders.

Consider these scenarios whether you have a dedicated building or you work from home. If any apply to your business, you need liability insurance.

You have an employee or employees.

If you employ another person (both full-time and part-time), you open yourself up to potential legal issues. For instance, if your employee often fails to show up for work on time and you fire them, they could sue you. Your employee may accuse you of anything, from wrongful termination to sexual harassment. If you are sued, liability insurance can pay the legal fees. If you want to avoid cleaning out your bank account, make sure you are insured.

You have to visit a customer's property.

If your business requires you to visit a customer's office or home, liability insurance can help you repair or replace anything you or your workers accidentally damaged, says Charles Spinelli. Let's say your employees are doing an HVAC inspection, and they accidentally damage a duct; liability insurance has you covered. 

You have face-to-face communication with clients.

No matter where you interact with your clients, there's always the possibility that accidents could occur. It may be something as simple as a slip or as unexpected as a client choking on gum they got from a bowl in your office. In either case, liability insurance protects you from risk, notes Charles Spinelli

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You want to bid on jobs.

As your business grows, there will be some jobs that may require you to bid on them. Those jobs generally require you to carry liability insurance.

Let's say you own a repair and maintenance business, and you've heard that your local government is looking for a company to help maintain a public office downtown. The time to secure liability insurance is before you bid for the job, Charles Spinelli says. Everything should be in place before bidding begins.

You advertise your business.

Nothing we do or say is original anymore. There's very little chance of you using advertising slogans or taglines no other company has used, says Charles Spinelli. But you can get into legal trouble when a tagline or slogan you used has been copyrighted or trademarked.

Even if you accidentally use trademarked or copyrighted wording, the owner of the copyright or trademark can still sue you. Liability insurance can help you pay legal costs.

Charles Spinelli shares important information on human resources in his blogs. Read them on this page.