Having liability insurance is important if you are running a business. Even a one person operation can benefit from having liability insurance for protection against litigation. The question then becomes, is cheap liability insurance worthwhile?

The difference between cheap liability insurance and expensive liability insurance may only come to light if you get in trouble. If you skimp on insurance and find you do not have enough when there is a problem, you will have an expensive answer. If you blow a bundle on expensive insurance you do not need, you are wasting cash you need for other parts of the business.

Research prior to purchase can be invaluable later on. Consult with your insurance professional and look at industry statistics for your type of business to help determine how much to pay for liability insurance. Any time you are in a business or consulting business and you need to enter someone else’s premises, you need liability insurance. If you have employees who work for you, you need coverage for their work. If you produce a product or make repairs, you need coverage for defects and errors. Liability insurance can cover you for quality, delivery, and protect you from litigation or disastrous court awards.

If you have cheap liability insurance, it may be adequate for your needs. If you do not have enough coverage for the work you are doing then cheap liability will prove to be too expensive. Having $10,000 is not good if you get into a court case and are found liable for $75,000 in damages. What you want to settle upon is the right amount of coverage for the work you are doing.

There is so much litigation today that it is inconceivable that a company would do work without proper liability coverage. Many companies will not hire a subcontractor unless they have their own liability insurance. To get work and to work confidently, be sure that you have enough liability insurance. Get cheap liability insurance at the minimum. Get the insurance and then take a second look to be sure you have enough liability coverage. If you do not have enough liability coverage the “cheap” will no longer be cheap if you get in trouble.

What about cheap car liability insurance?

You can find cheap auto liability insurance, but just like with commercial liability insurance, you want to be careful.  It’s one thing to find a good deal, entirely another to buy terrible, but cheap insurance.

Liability auto insurance is the most important car insurance you can have so make sure:

1. your coverage is adequate.  Get the most coverage you can afford.
2. you are buying from a financially solid company.  Check your potential insurance company’s credit rating at AM Best or Standard and Poor’s to make sure the insurance you are paying for will be there when you need it.

One important liability faced by any business owner who employs people or contracts help is that of claims of disease, fatality, or injury to employees resulting from workplace conditions or practices. These claims, made by employees, are covered by Employer Liability Insurance.

Employer Liability Insurance is typically offered as part of a workers compensation package.  Extra Employer Liability Insurance can also be purchased separately. Employer liability is not covered by Public Liability Insurance. There are essential differences between employer and public liability insurance which are important to understand: public liability insurance protects against claims of damage, injury or death due to a business owner’s negligence brought by a third party while these claims coming from an employee of the business are covered by employer liability insurance.

Standard Workers’ Compensation benefits are regulated by the state in which you do business, but you can select the amount of Employer’s Liability insurance as you shop around.  Premiums for these insurances are based on payroll and your company’s type of business as well as the employees you have and their specific work duties.  The costs of past claims associated with your industry as well as specific risks associated with your business are also taken into account.

As you shop for employer and other business related insurance policies, take your time, do your research, and compare many options.  In the end though, instead of purchasing the lowest priced policies from various companies, talk with an experienced business insurance broker, (if you can find one that specializes in your industry, even better) who can help you get the best coverage while avoiding gaps and double coverage.

According to the risks of liability you face, you may need to purchase an umbrella policy which will cover the difference between a potential awarded claim and the limits of your policies.  Umbrella policies generally cover general liability, hired and non-auto liability employers liability.

Remember, before purchasing any insurance policy to check the financial stability of the company providing it.  Use AM Best or Standard and Poor’s online insurance ratings to make sure you are buying from a company that will be around when you need to make a claim.  Also, you can check their customer service and claims paid record on your state’s Department of Insurance website.