Today’s small businesses face a variety of legal risks that can threaten both their reputation and financial stability. Comprehensive liability insurance is a valuable tool for protecting against common risks and claims, such as product defects, client disputes, and cybersecurity breaches.
Find out how comprehensive liability business insurance can help safeguard your business from legal pitfalls in Hawaiʻi.
What Is Comprehensive Liability Insurance?
Commercial liability insurance is an essential coverage for small business owners in Hawaiʻi, protecting you from claims that your business caused property damage or bodily harm.
Without enough insurance coverage, you could be responsible for any out-of-pocket expenses that result from a claim, such as medical bills and property repair costs.
The most common types of liability coverage include:
General Liability Insurance
General liability insurance (GLI) covers claims that your business caused third-party property damage, third-party bodily injury, reputational harm, or advertising injury. GLI is available as a standalone policy or can be bundled with other coverage options in a Business Owner’s Policy (BOP).
Professional Liability Insurance
Professional liability insurance (PLI) protects different types of professionals against negligence or sub-standard work claims filed by their clients.
Professionals who have specialized expertise in certain areas, such as attorneys, accountants, and physicians, should always carry PLI as general liability policies do not generally protect against claims of malpractice, negligence, breach of contract, or misrepresentation.
Product Liability Insurance
A product liability policy protects companies against claims that a product they manufactured or sold resulted in property damage or bodily injury.
Any type of business that makes or sells items to customers are at risk of a defect or mistake that causes injury or property damage. If this situation occurs, a product liability policy may help cover related expenses, such as the customer’s medical costs and the business’s legal fees, settlements, or judgments.
Cyber Liability Insurance
Cyber liability insurance is a type of policy that covers costs associated with cyberattacks and breaches on your business.
Coverage options are available to address a range of expenses, such as forensic investigations, crisis management expenses, litigation costs, betterment, cyber extortion, business interruption, and regulatory defense expenses and fines. This also covers notifications to affected parties that are required in many states, including Hawaiʻi.
Identifying Common Legal Risks
While all businesses experience risks, it’s important to identify and avoid legal risks whenever possible. Liability insurance offers an effective and affordable way to help minimize the reputational and financial repercussions that can result from a legal dispute or claim.
Some of the most common legal issues to avoid include:
Product Defects
Businesses that manufacture or sell products are at risk for product defects. These defects can range from manufacturing errors and design flaws to inadequate warnings about a product’s potential safety risks. If a defective product causes harm or property damage to a third party, your business could be held liable.
Professional Errors and Omissions
Many professions involve giving professional advice or performing professional services, all of which can lead to financial losses for clients. Professional liability insurance can cover claims relating to these types of errors.
Some clients may make allegations of negligence if your business fails to perform your services to a certain standard, resulting in a costly legal battle. Liability insurance can help cover any legal fees and fines that may arise from such claims.
Client and Customer Claims
Businesses can be held responsible if a client or customer is injured on their premises, such as in the case of a slip and fall accident due to unsafe conditions. Business activities can also lead to damage to a client’s personal property, such as when a technician accidentally causes damage to a client’s home during a professional visit.
Client and customer claims can also come in the form of dissatisfaction such as when a client claims they are unsatisfied with your products and services and seek compensation for their losses.
Cybersecurity Breaches
With businesses relying more heavily on digital systems, the risk of cybersecurity breaches has grown significantly. Today’s businesses risk exposing sensitive customer information, which can lead to potential lawsuits from affected parties.
Cyberattacks, such as phishing scams and ransomware, can also interrupt or halt business operations, leading to financial losses. Furthermore, depending on the type of breach, the number of clients a business has, and other factors, compliance with Hawaiʻi’s notification laws can become quite costly in the absence of insurance coverage.
Partner with Atlas for the Right Policy for Your Business
Recognizing and preparing for common legal pitfalls can help safeguard your business from reputational and financial damage. Since 1929, Atlas Insurance Agency has helped clients obtain the liability insurance they need to keep their business well-protected from common risks.
We use a client-based approach to meet the specific needs of each client and use our global partnerships to offer the most competitive options. Contact Atlas today at (808) 400-6680 to get started.