Understanding High Hazards and Complex Liability

As fulfilling as it can be running your own business, it also comes with immense responsibility, risks, and liabilities. To mitigate these risks and protect your business should you find yourself on the receiving end of a lawsuit, you’ll need numerous forms of business insurance. If you’re in a high-risk industry, understanding the different kinds of insurance you require can be daunting, but it’ll make sense once you take into account your business’s unique liabilities. 

Standard Forms of Business Insurance 

Across all industries, from the most “dangerous” jobs to run-of-the-mill offices, business owners typically purchase some combination of the following business insurance policies: 

  • Worker’ Compensation– This type of insurance covers medical expenses and provides wage compensation when an employee sustains an at-work injury or develops a work-related illness. 
  • Errors and Omissions– Also known as professional liability insurance, this policy can protect your business and employees if they make business-related mistakes. It covers the legal expenses if another company or client decides to file a lawsuit on the grounds of negligence, misrepresentation, inaccurate advice, or work that goes against a contract.
  • Product Liability– Product liability insurance covers against claims or lawsuits filed due to personal injury or property damage caused by the products you sell. It provides coverage for legal expenses and medical expenses as well. 
  • Commercial Property Liability– This insurance covers your business property, including the building, inventory, and equipment. 
  • General LiabilityGeneral liability insurance helps cover the expenses incurred if a customer or client sues your business for personal injury or property damage. It also kicks in if you’re sued for advertising injury. 

What Types of Businesses Face Higher-Hazard Liabilities?

By nature, some businesses have more liabilities than others. For example, production that requires industrial equipment, work conducted at a client’s property, and services that involve legal or financial advice all come with higher risks. Industries that tend to engender high-hazards and complex liability include: 

  • Construction
  • Pharmaceuticals
  • Manufacturers
  • Wholesalers
  • Distributors
  • Shipping and transportation 
  • Mining 
  • Financial advising 
  • Agriculture
  • Energy

It’s not uncommon in these fields to incur legal expenses resulting from property damage, financial loss, and reputational risks. Whether you face complex product liabilities or property damage liabilities, you will need the right coverage to save your business.

What Solutions Are There for Complex Liability?

If your business faces higher than usual risk, you may want to consider one of the following insurance solutions: 

  • Individualized Coverage– You don’t have to choose pre-made insurance policies. Instead, you can work with an agent to curate insurance policies that fit your specific needs and provide more coverage in the areas you face the most risk. 
  • Catastrophic Liability Coverage– This form of business insurance provides coverage for damages that occur due to natural disasters and human-made damage. A general homeowner’s insurance may not include these low-probability disasters that have high costs. It covers property damages and provides compensation for the loss.
  • Umbrella Coverage– Your general liability may cover a wide range of liabilities, but the costs incurred may exceed the amount of coverage offered in some situations. Umbrella insurance policies provide extra coverage beyond the bounds of your other insurance policies. 
  • Higher Policy Limits– Rather than sticking to the minimum policy limits, look for insurance companies that offer higher limits and lower deductibles. 

Risky Business 

All businesses have vulnerabilities, but with the right insurance coverage, you can rest assured that a single accident or lawsuit won’t devastate your business or dry up your own savings. 

Even with proper coverage, you should do everything within your control to reduce liabilities. Preventative actions you can take may include educating consumers regarding products, keeping your business’s premises clean and safe, and conducting regular evaluations for your business’s products and services.

If you take the right precautions and have the right insurance policies in place, you can protect your business from financial and reputational losses, no matter how “risky” your industry. 

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