General Liability Insurance in California: What You Need to Know

It’s common for businesses to carry general liability insurance as a basic policy and then add supplemental coverage. Various other options exist for businesses to protect their personnel from getting sued. While most insurance-related decisions are up to the business owner, it’s essential to obtain the right policy from the beginning. Here’s a look at general liability insurance and what it covers.

Additional Liability Coverage

Many businesses use general liability insurance as a core and then add endorsements based on specific coverage needs. The policy pays for people who visit your establishment and become ill or injured during their visit. Entrepreneurs who launch startups need to take into account specific risks that affect their business plans. Here’s a look at some of the different types of coverage that can be added to a basic general liability insurance policy to protect the employees.

Professional Liability Insurance (Errors & Omissions)

This coverage pays for mistakes made by your employees. Also known as Errors & Omissions, the coverage includes negligence resulting in third-party injuries or property damage. This add-on is used by various professions, including law firms and financial institutions. In the state of California, tech companies typically invest in this coverage.

Employment Practices Liability Insurance (EPLI)

While workers’ compensation provides employees coverage for on-the-job injuries, EPLI extends this coverage to include legal costs. It may apply to wrongful termination, discrimination, or some form of harassment. Employees can file lawsuits against their employers for a variety of reasons that aren’t always predictable. This coverage particularly pays for problems caused by the employer that affect the employee’s emotional well being,

Directors and Officers Insurance (D&O)

Company leaders are expected to present themselves professionally, but sometimes they can fall out of line with corporate governance. What may have been considered acceptable business behavior previously is now commonly questioned by media and authorities, especially if it involves violating an employee’s rights.

D&O insurance gets deeper into negligence than EPLI. It shields employees from lawsuits that threaten their personal assets. This coverage pays for defense and settlement expenses. The amount of coverage you choose depends on the degree of risk the directors and officers pose to your company’s reputation. Carrying this coverage helps a business attract high-level talent.

Any business professional can get sued for a wide number of reasons, especially if they do a job improperly and it causes financial damage to a client. Executives and board members can get sued by shareholders when they commit actions that hurt investors. Accounting errors can create a big mess of mistakes, especially if the company has not yet converted to digital infrastructure.

Any private company with a board of directors should carry D&O insurance since lawsuits involving investments can be unpredictable. Your board might vote on issues that might reward each member personally while adversely affecting outside investors.

Directors and officers have a responsibility to be transparent and honest with investors. Any signs to the contrary that might be considered misleading investors can result in a class-action lawsuit. Without D&O protection, company executives can get sued directly by investors to pay for losses.

Every business faces the risk of getting sued either by employees, vendors, or others. Having the right general liability insurance coverage along with suitable add-ons can protect your business from potential liabilities.

Contact us at Burton A. Harris Insurance Agency to learn more about general liability and other forms of commercial insurance.