To be legally obligated and held accountable for something.


What is liable?

In simple terms, liable means being responsible for something. In a legal context, being liable or “liability” means being legally responsible for compensating someone for financial losses or damages caused by your actions or omissions.

As a small business owner, you might be considered liable in the following everyday situations:

  • If a customer gets injured in your store or while using your products or services.
  • If your business damages someone else’s property.
  • If you make a mistake in your professional services that causes financial losses for your client.
  • If you sell a product that turns out to be defective and injures someone.

How liability and insurance work together

Being liable means taking responsibility for harm or damage caused. For example, if someone slips in a store due to the business’s mistake, they’re liable for the injuries.

This is where insurance comes in to help. Liability insurance can offer financial protection against specific risks and prevent the owner from shouldering the full costs themselves.

So, if a company is found liable, this insurance helps cover costs like legal defense, settlements and judgments up to policy limits.

Types of liability insurance for small businesses

Liability insurance is an investment in your business’s future. It allows you to focus on running your business instead of worrying about lawsuits.

  • General Liability insurance: This is the most common and basic type of liability insurance, covering a wide range of risks, such as bodily injury, property damage, and personal injury.
  • Professional Liability insurance: Also known as Errors and Omissions (E&O) insurance, this type of insurance helps protect businesses that provide professional services from claims of negligence or professional mistakes.
  • Product Liability insurance: This insurance protects businesses from claims arising from injuries or damages caused by defective products.
  • Commercial Auto insurance: This type of liability insurance provides coverage for you and your employees when anyone is driving for work.

While liability insurance offers valuable protection, businesses must be aware of its limitations, including coverage limits, policy exclusions, legal and regulatory restrictions, and the distinction between claims-made and occurrence policies.

How to minimize liability in a small business

Being held liable for something can devastate a small business. To minimize liability exposure and ensure adequate protection through insurance, business owners should consider the following steps:

  • Execute an in-depth risk assessment for the business.
  • Implement risk management strategies to mitigate identified risks.
  • Ensure compliance with all relevant legal and regulatory standards.
  • Consult with insurance professionals to understand specific insurance needs.
  • Purchase appropriate types and levels of liability insurance.
  • Regularly review and update insurance policies to match the business’s evolving needs.
  • Maintain detailed records of safety protocols, employee training, and incident response procedures.
  • Respond promptly and effectively to any incidents that may occur.

How NEXT works with your business

We know your business is unique and has specific needs. That’s why we offer affordable, custom business insurance.

To get your tailored instant quote, simply answer a few questions online. Once you’ve purchased your insurance, you can immediately access your certificate of insurance and share it 24/7 via the NEXT app.

Start a free instant quote with NEXT.

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Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your 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.
* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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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.

Any starting prices or premiums represented before an actual customer quote are not guaranteed and are representations of existing premiums of active policies as of December 6, 2023. To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.