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.

BREAKING DOWN '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. Third-Party Insurance

    An insurance policy purchased for protection against the actions ...
  2. Backdated Liability Insurance

    Liability insurance that provides coverage for a claim that occurred ...
  3. Liability

    Liabilities are defined as a company's legal debts or obligations ...
  4. Contractual Liability Insurance

    An insurance policy that protects against liabilities that the ...
  5. Aggregate Product Liability Limit ...

    The maximum sum of money that an insurance company will pay during ...
  6. Limited Liability

    A type of liability that does not exceed the amount invested ...
Related Articles
  1. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  2. Insurance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  3. Small Business

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  4. Financial Advisor

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  5. Managing Wealth

    Asset Protection for High Net Worth Individuals

    OK, you've made it. Here's how to hang onto it.
  6. Insurance

    Is It Safe To Be Without Umbrella Insurance Today?

    At low cost, you can buy significant extra liability coverage in case you're sued due to an accident or other trouble. See it as bankruptcy protection.
  7. Insurance

    The Advantages of Umbrella Liability Insurance

    Don't let unforeseen lawsuits threaten your bottom line. Consider purchasing an umbrella policy.
  8. Managing Wealth

    6 Insurance Policies That Protect the Wealthy

    Here are six types of insurance that the wealthy use to protect their assets.
  9. Managing Wealth

    Protect Your Company From Employee Lawsuits

    Understanding employment practices liability insurance is easy, once you know the basics.
RELATED FAQS
  1. What is the difference between legal liability and public liability?

    Discover the differences between a general legal liability, a specific public liability and a professional indemnity in the ... Read Answer >>
  2. How might a company's contingent liabilities affect its share price?

    Discover what contingent liabilities are, and how and to what extent such liabilities may have an impact on a company's share ... Read Answer >>
  3. What are some examples of current liabilities?

    Examine some common examples of current liabilities a company may owe within a year or less in order to accurately assess ... Read Answer >>
  4. What risks does a business owner face under a business structure with unlimited liability?

    Understand the types or risk a business owner faces under a business structure with unlimited liability. Learn why a business ... Read Answer >>
Hot Definitions
  1. IRR Rule

    A measure for evaluating whether to proceed with a project or investment. The IRR rule states that if the internal rate of ...
  2. Short Covering

    Short covering is buying back borrowed securities in order to close an open short position.
  3. Covariance

    A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns ...
  4. Liquid Asset

    An asset that can be converted into cash quickly and with minimal impact to the price received. Liquid assets are generally ...
  5. Nostro Account

    A bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Nostro accounts ...
  6. Retirement Planning

    Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve ...
Trading Center