If you are a small business owner, liability protectioninsurance may be something you want to consider. Unfortunately, many peopleoverlook this type of insurance because they already have Workers’ Comp. Confusingthe two different types of insurance can be a big mistake and can end upcosting you money.
But what exactly is liability protection and what is thedifference between it and workers comp? Let’s take a look. What is Liability Protection Insurance?This type of insurance coverage helps to cover the costsof any legal fees if you should ever be sued by an employee or contractor. Itcan help to protect your business against things like sexual harassment suits,discrimination claims, retaliation claims, wrongful termination cases, ordeprivation of career opportunity charges. Many people often skip this type of insurance because “itwould never happen to me”. But remember, you can be faced with an accusationwhether you are guilty or not. And all it takes is one disgruntled employee tothrow an accusation your way for you to face years of legals fees andinvestigation costs.Who is covered under Liability Protection Insurance? Protection insurance usually covers claims made againstany of your management personnel. In some cases, it may also protect otheremployees.
Liability insurance protects against claims made by employees andformer employees, job candidates, temporary staff, and independent contractors.It also protects against claims made by customers and vendors. When are wrongful employment claims usually filed?An employment suit can be filed against you at any time.With that being said, they are more commonly reported during the hiring andrecruitment process and during offers of employment. You are also at high riskduring times of training and orientation, performance reviews, and termination.What’s the difference between Liability ProtectionInsurance and Workers Comp?The confusion between these two forms of insurance usuallycomes stems from people thinking that workers comp covers everything. Itdoesn’t.
There are two parts of Worker Comp. Firstly, it pays for youremployees medical bills and lost wages if they face a personal illness orinjury. Secondly, it pays for legal expenses if an employee is ever injured atwork due to negligence on behalf of the employer. And this second part is wherepeople often confuse Workers Comp with Liability Protection. Where Workers Compcovers legal expenses against injury, Liability protection covers legalexpenses against allegations. Do I need Liability Protection?If you are a business owner, small or large, you needliability protection insurance. In cases of allegation, people can make a claimregardless of whether you are guilty or not.
So being a good person andfollowing all the rules doesn’t necessarily mean you are safe. In addition, youcan’t predict the behaviour of your management team. As mentioned previously,all it takes is one upset employee to cost you thousands in legal fees – guiltyor not. So when it comes to protecting yourself and your business, it’s alwaysbetter to be safe than sorry.