Insurance Basics for New Business Owners
The current litigious business climate makes obtaining appropriate insurance a must for new business owners. Insurance can help cover the costs of a burglary, an injury to an employee, or some lawsuits, among other liability situations. Paying the insurance premiums now does not just cut down on future costs – in some industries, some types of liabilities are required to be covered by insurance.
General Business Liability Insurance
General business liability insurance, also referred to as commercial general liability insurance or similar, can pay for costs incurred if your business is burglarized, if a customer is injured, if you damage the building your business rents, or if certain types of lawsuits are filed against the business. These policies may include provisions for payment of legal fees or settlements.
Worker’s Compensation Insurance
In California, all employers of one or more employees must purchase worker’s compensation insurance. California Labor Code § 3700, et seq. Under these policies, the employer essentially assumes liability for injuries that employees suffer while working for the employer. If an employee is injured, he receives compensation under the terms of the policy. California also requires that a corporate officer must be covered by worker’s compensation policies, unless the officer owns a certain, minimum percentage of the corporation and elects to be excluded from the insurance requirement.
Professional Liability Insurance
If your business employs professional workers, such as lawyers, doctors, or architects, you may need a professional liability insurance policy. These policies help cover the cost of defending malpractice claims against your business arising from the actions of your professional employees. Whether your business holds professional liability insurance may be a consideration for your customers in deciding whether to engage your services: in California, lawyers must disclose to clients if they do not have this insurance. State Bar of California Rules of Professional Conduct, Rule 3-410. As malpractice claims can result in enormous liability for businesses, you should seriously consider purchasing professional liability insurance if you employ professionals.
Other types of insurance for businesses exist and may be a good fit for you. Seek out an attorney to advise you about your business’s needs to protect from liability. Michael Leonard, Esq., of San Diego Corporate Law, named a “Rising Star” for 2017 by SuperLawyers, has the experience and the insight to evaluate each business’s particular needs. To schedule a consultation, e-mail San Diego Corporate Law or call Mr. Leonard at (858) 483-9200.