What Small Businesses Should Know About Liabilities & Insurance

Small businesses should know the different types of liability insurance available and the kind of protection they offer.


This knowledge can help business owners make informed decisions about what kind of coverage they want, how much it costs, and how it works with other insurance policies.

This article will explore the essential things small businesses should know about liabilities and insurance:

1. Public Liabilities

Liabilities are the debts you owe. In the business world, liability is more than just a financial term. Liability is also a legal term that describes a person’s or business’s legal responsibility for an act or omission.

In Australia, public liability covers any losses suffered by a third party due to a business’ negligence or breach of duty to another person. It includes accidental injuries, bodily harm, and death.

In Britain, there is no specific legislation covering public liability claims; instead, each constituent country that makes up Great Britain has its laws. However, most British laws are similar to those that govern public liability insurance in Australia, including covering intentional and unintentional acts.

The main difference between the two countries’ public liability coverages is how they protect businesses from legal action. In Australia, businesses must have public liability coverage to operate, while Britain does not need it.

2. Umbrella Policies Offer Extra Liability Protection

When you have sizable assets, it’s essential to protect them. If someone sued your business with the verdict finding you liable for damages, you could end up with nothing. An umbrella personal liability policy can help protect your assets from this risk.

Umbrella policies are more expensive than other types of insurance because they require a higher deductible and offer higher levels of coverage than basic liability insurance.

Therefore, you’ll pay more out-of-pocket for the initial cost of an umbrella policy. However, it will save you money in the long run by protecting your assets from lawsuits if something happens to your business or personal assets.

3. Errors & Omissions Cover

Errors & omissions insurance is one of the many available types of insurance that covers you for losses and liabilities incurred by your business in case of a claim brought against you due to negligence or breach of duty.

Errors & omissions cover lousy advice or faulty services. These include:

  • Negligent hiring and training.
  • Defective or dangerous products.
  • Failure to provide adequate warnings or instructions.
  • Failure to warn of obvious but not apparent hazards to the user or consumer (or even your employees).

The main thing to remember is that errors & omissions insurance only covers situations where the provider has given you bad advice or faulty services, which in turn causes you financial loss or injury. It doesn’t cover things like having a fire caused by faulty wiring or negligence from the provider itself.

General liability insurance may only cover some things.

General liability insurance covers the most common types of lawsuits your business might face. It’s also essential to have general liability insurance in place, but there are other types of insurance that small businesses need.

General liability insurance will only cover things where someone or another business can file a suit against you for different reasons; you may need additional coverage to protect yourself from those claims.

For example, if you’re a contractor working on someone else’s property, general liability insurance won’t cover you if someone slips and gets hurt. In addition to general liability coverage, you should have additional coverage that offers more protection than just general liability.

4. Professional Liability Covers Errors Specific to Your Profession

Professional liability insurance protects businesses from claims filed by clients, customers, and third parties. This type of coverage is essential for lawyers, accountants, engineers, and other professionals who are likely to get sued for errors in their work.

Professional liability can be expensive because it covers the cost of defending a lawsuit and any fines or penalties assessed against you if you are found liable for damages caused by one of these lawsuits.


This article should give you a good overview of what small businesses need to know about liability insurance.

However, remember there are many factors to consider when picking the right liability insurance product for your business, including the amount of coverage needed and whether or not you have other types of insurance policies on hand.