Business Liability Insurance

AAA

DEFINITION of 'Business Liability Insurance'

Insurance that protects a company and/or business owner in the event of a formal lawsuit or other third-party claim. Coverage includes any financial liability incurred in addition to expenses related to the company's legal defense. There are three main types of business liability insurance: general liability insurance, professional liability insurance and product liability insurance.

INVESTOPEDIA EXPLAINS 'Business Liability Insurance'

If you are a small business owner, your form of ownership - especially a partnership or sole proprietorship - could put your personal finances at risk in the event of a business-related lawsuit. Even under a limited liability corporation (LLC) you could still be exposed to personal risk. Business liability insurance can provide you with greater insurance protection than is offered by your legal structure.

New or additional insurance policies should contain an exclusions clause to minimize cost by avoiding duplications of coverage provided in other policies and/or to eliminate any unneeded coverage.

RELATED TERMS
  1. Professional Liability Insurance

    Insurance that protects professionals such as accountants, lawyers ...
  2. Business Insurance

    Insurance coverage that protects businesses from losses due to ...
  3. Business Interruption Insurance

    A form of insurance coverage that replaces business income lost ...
  4. Business Owner Policy - BOP

    Insurance policies that combine protection from all major property ...
  5. Sole Proprietorship

    The sole proprietor is an unincorporated business with one owner ...
  6. Partnership

    A business organization in which two or more individuals manage ...
RELATED FAQS
  1. Why are insurance companies and pension funds considered financial instruments?

    Insurance policies are widely considered to be financial instruments. Pension funds may contain many different types of financial ... Read Full Answer >>
  2. What's the difference between the production cost and the manufacturing cost?

    Production costs include any expenses associated with business activity for an organization. Manufacturing costs only include ... Read Full Answer >>
  3. What is the difference between speculation and gambling?

    Speculation and gambling are two different actions used to increase wealth. However, the two are very different in the world ... Read Full Answer >>
  4. What is the difference between moral hazard and adverse selection?

    Adverse selection occurs when there's a lack of symmetric information prior to a deal between a buyer and a seller, whereas ... Read Full Answer >>
  5. How are contingent liabilities reflected on a balance sheet

    Contingent liabilities need to pass two thresholds before they can be reported in the financial statements. First, it must ... Read Full Answer >>
  6. What is the difference between an operating expense and a capital expense?

    An operating expense (OPEX) is an expense required for the day-to-day functioning of a business. In contrast, a capital expense ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    Don't Get Sued: 5 Tips To Protect Your Small Business

    Find out what you can do to limit risk and keep your business running smoothly.
  2. Home & Auto

    The History Of Insurance In America

    Insurance was a latecomer to the American landscape, largely due to the country's unknown risks.
  3. Entrepreneurship

    Will Insurance Keep Your Business Safe?

    Skilled employees are key to a successful business. Find out how to avoid a financial setback if they leave.
  4. Entrepreneurship

    New Year Planning For Business Owners

    Make a resolution to start your business off on the right foot in the new year.
  5. Professionals

    Choosing A Mobile App For On-The-Go Business Needs

    There are mobile apps which cater to the needs of you and your business if your business activities involve moving around, rather than being in one spot.
  6. Entrepreneurship

    Get the Best Freelance Rates for Your Work

    Smart strategies for estimating costs, researching fees, pricing projects and getting your rate for a range of clients.
  7. Professionals

    How to Fund Retirement with Insurance

    So you've contributed the max to all available retirement vehicles...now what? Consider a permanent life insurance policy (and its fee structure).
  8. Economics

    Explaining Cash On Delivery

    Cash on delivery, also referred to as COD, is a method of shipping goods to buyers who do not have credit terms with the seller.
  9. Entrepreneurship

    What is Unlimited Liability?

    Unlimited liability means that the owners of a business are liable for the entire amount of debt and obligations of that business.
  10. Entrepreneurship

    The Story Behind Google's Success

    An ongoing commitment to innovation and rapid iteration drives Google's ongoing success.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center