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Types of Liability Insurance

Learn about different options for small businesses

Liability insurance is business insurance that can help when your business accidentally causes injury to someone or damages their property.

If you’re found responsible for causing someone harm, be it to their body, reputation or possessions, liability insurance can help cover the cost without you having to pay for everything out-of-pocket.

Why you need liability insurance

Accidents happen, and anyone can make a mistake. Different types of liability insurance coverage can help make those mistakes less costly.

Liability insurance comes in many different flavors

This way, you only need to purchase the coverage you need and you aren’t stuck paying for insurance that is irrelevant to your business operations.

One of the key things to remember about liability insurance is it can help with costs when you make a mistake or have an accident — but  it can also help protect you when you are accused of causing harm and not at fault.

You don’t need to do anything wrong for someone to sue you. But you still need a legal defense for your business. Liability insurance can help cover legal costs and other expenses.

Types of business liability insurance policies

Liability insurance covers accidents that happen to “third parties” — this means liability claims from people who don’t work for your business.

Several types of liability insurance can help small businesses avoid a financial loss. The coverage you need depends on the risks associated with your operations. Here are some examples of common types of coverage:

General liability

General liability insurance is often the first type of business insurance small business owners purchase because of its wide breadth of coverage. It can provide financial help for common accidents businesses face, such as:

Injuries

A general liability policy can help to cover medical bills if someone other than an employee gets injured at your business. This is known in legal terms as a “bodily injury.”

Medical payments can add up quickly. Without insurance, these types of accidents can have a significant impact on your business’s bottom line. With the right coverage, you won’t have to pay entirely out of pocket for medical costs and other expenses.

Property damage

This coverage can also help to cover costs if you are responsible for damaging property that doesn’t belong to you.

Note: If you would like to also have coverage for your business property, you can purchase a business owner’s policy with general liability and commercial property coverage.

Advertising harm 

You can get help with defense costs, legal fees and judgments if you are accused of libel, slander or invasion of privacy with your advertising. This is sometimes referred to as a “personal injury.”

Professional liability

Professional liability, also known as errors and omissions insurance, can help protect you when you’re accused of negligence or making a professional mistake.

This is a common type of insurance for people who work in professional services.

Pro tip: Learn more about the difference between general liability vs. professional liability insurance.

Commercial auto

Liability coverage with commercial auto insurance can provide financial protections if you are responsible for injuries or property damage after an accident.

Your personal auto insurance may not cover you if you’re driving for business purposes. Commercial auto insurance can provide coverage if you drive for work and it often has higher coverage limits than personal auto policies.

Product liability

Sometimes the products people purchase end up causing them harm.

If you are a retailer — this includes amazon sellers, e-commerce and physical stores — you could be held liable if a product causes an injury or illness.

Product liability insurance can provide financial help if you make, distribute or sell a product that someone claims is defective or dangerous. Even if an accusation is unwarranted, it can help cover legal costs to defend your business.

Employment practices liability insurance

Even with proper training and safeguards in place, accusations of discrimination, sexual harassment and wrongful termination can happen at small businesses with employees.

As the business owner, you could be accused of not taking steps to prevent a hostile work environment.

Employment practices liability insurance (also known as EPLI) can provide coverage for lawsuits involving discrimination, harassment and wrongful termination.

Liquor liability

If you serve alcohol at your business, you could be held responsible for damages if you serve someone who then causes an injury or property damage. Liquor liability insurance can provide financial protection if that happens.

Employer liability

Employer liability is an important part of workers’ compensation insurance which, depending on how many employees you have, is required by law in most states.

Workers’ comp can help pay for employee medical costs and lost wages after work-related injuries.

If your employee sues you for additional damages, employer liability coverage in your workers’ comp policy can help you defend your business.

NEXT offers tailored liability insurance

Every business has its own unique risks and hazards. That’s why NEXT offers small business insurance tailored for over 1,300+ business types.

Whether you need liability insurance, workers’ compensation, commercial property insurance, commercial auto or other business insurance, you can create a plan for your business with our fast, tailored and affordable options online.

Plus, save up to 10% when you bundle two or more policies with NEXT.

You can start a quote, customize your options and access your certificate of insurance online in about 10 minutes.

Start your instant quote today.

Let’s find the coverage you need for your business

Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your small business.

General Liability insurance
General Liability

Protect yourself from accidents that cause physical injury or damaged property.

Professional Liability or Error and Omissions Insurance
Professional Liability/E&O

Shield yourself from lawsuits that claim your work errors caused financial losses.

Workers' Compensation Insurance
Workers’ Compensation

Cover medical bills and lost wages if your employees have an accident at work.

Commercial Auto Insurance
Commercial Auto

Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.

Tools & Equipment Insurance
Tools & Equipment

Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.

Commercial Property Insurance
Commercial Property

Keep your building, inventory and equipment protected from fire or water damage.

Business Owner’s Policy Insurance
Business Owner’s Policy

Combine general liability and commercial property into one policy to protect your business.

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© 2023 Next Insurance, Inc. 975 California Ave, Palo Alto, CA 94304, United States
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Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.