If you run a small business, you’re well aware of how many things can go wrong. Even if they haven’t happened to you personally, you’ve probably heard the horror stories. Whether accidental customer injuries, legal action from competitors or any of a thousand other heartburn-inducing scenarios, the risks and pitfalls of running even a very small enterprise can keep you up at night.

One of the most effective ways to protect your business from potential financial loss is with general liability insurance. Let’s explore how this kind of coverage helps keep small business owners confidently on track to success.

What Is General Liability Insurance

Also known as commercial general liability insurance, general liability insurance protects businesses from financial loss arising from claims of damage or injury caused directly or indirectly by your business operations. It can help cover the costs of legal fees, medical expenses and lawsuit damages from incidents that are not intentional in origin.

General liability insurance typically covers several key areas, including:

Bodily Injury

In the unfortunate event that a customer is injured on your business premises or as a result of your business activity, general liability insurance can help cover the costs of damages, medical expenses and legal fees. For example, a customer could be struck by ice falling from a business’s roof.

Property Damage

If a customer or client’s property is damaged as a result of your business activity, general liability insurance can help with the costs of repairs or replacement. For example, if you own a landscaping business and one of your employees accidentally damages a customer’s driveway property while providing service.

Personal Injury

Personal injury of a nonphysical nature to a third party—such as false advertising, libel or slander that results in financial loss—can be covered by general liability insurance. For example, a customer could claim that a business’s advertising materials contain misleading claims that resulted in the customer experiencing financial loss.

Advertising Injury

Copyright infringement or violation of intellectual property rights related to your business’s advertising or promotional materials can also be covered by general liability insurance. For example, an advertisement might accidentally include copyrighted material for which the owner seeks compensation.

Without adequate insurance coverage, a business could be severely impaired—or even bankrupted—when held financially responsible for harm arising from occurrences such as these.

What Coverage Does a Small Business Need?

As you can see, selecting the right general liability insurance can be a game changer for a small business. The amount of coverage your business needs will depend on several factors, including the size of your business, the industry you’re in and the specific risks your business faces.

But let’s not forget: There are other types of liability insurance, and these coverages can make a big difference when you need it. These include:

Umbrella Insurance

This type of policy provides additional liability coverage beyond the limits of your general liability policy.

Cyber Insurance

This covers financial losses resulting from data breaches, cyberattacks and other digital threats. In the age of advanced digital hazards, this kind of insurance is increasingly popular among business owners eager to protect themselves from rapidly evolving threats.

Product Liability Insurance

This covers claims of injury or property damage resulting from a defective product your business sells or manufactures.

Employment Practices Liability Coverage

An employment practices liability policy helps protect business owners against claims from a customer, client, or vendor alleging discrimination, wrongful termination, harassment (including sexual harassment), or other wrongful employment acts.

Most business owners have insurance to protect buildings, vehicles and other important assets, but few consider insuring their greatest asset: their people.

How would your business manage after the death of, say, your lead salesperson, your sole design engineer or your experienced plant manager? How long would it take to fill that position or get someone else up to speed on their projects? How much damage would the loss of a key person cost you financially?

Key Person coverage is a type of life insurance designed to help your business recover from the loss of a person whose role is critical to your success. It’s particularly beneficial to small business owners.

“Many small businesses are started by one or two people and others are added over time to fill skill gaps,” said Derek Holmes, life insurance product manager at Erie Insurance. “Often, the key employees have different strengths than the owner, so replacing those skills and maintaining productivity after a sudden death puts a lot of pressure on the business owner and the business overall. Key Person life insurance can offer some relief.”

Imagine Your Business Without …

“Key persons” can be anyone in your business whose roles, knowledge or performance have a direct effect on the bottom line of the business.

To understand the magnitude of the loss of one of your key people, try this exercise:

• Make a roster of the leaders of each of your company’s departments – sales, operations, finance, information technology, engineering, etc.
• Document each person’s financial impact on your company’s monthly and annual revenue. For some roles, like sales, the financial contributions are easy to track; for others, think in terms of the financial effects of efficiency, intellectual property and other value they add. Assign dollar figures to these contributions.
• Capture the estimated time it would take to find a replacement for that position and train them to an acceptable level of performance. Is it days, weeks, months or years? Time is money.

By quantifying the value that these leaders bring to your organization, you will gain an objective view of the risks that exist and the extent of Key Person coverage you may want to consider.

Funds from a Key Person claim can help reduce some of the financial burden of a personnel loss. If the business fails as a result of the death, the Key Person funds can be used to cover other employee severance, pay outstanding bills or provide a buffer as the business owner transitions to a new endeavor.

Does Key Person Coverage Come ‘Standard?’

Because Key Person coverage is a form of life insurance, business owners have options.

Term insurance might be ideal to cover a key person who is older and may be closer to retirement. A 10-year term policy may provide adequate coverage as you work to identify a successor.

For younger key people, you may want to consider whole life insurance, which can extend for multiple decades and sometimes at higher benefit levels.

By talking to an Erie Insurance agent, you may discover additional combinations to match your business needs, such as Guaranteed Insurability Option riders, which allows for purchase of additional coverage regardless of changes in their health.

“During your next commercial insurance review with your ERIE agent, talk about business continuation and Key Person coverage,” said Derek. “You’ve worked hard to build your business – it’s important to take the necessary steps to have insurance in place to keep it going.”

Enjoy the feeling of a future that’s well-planned and protected. Speak with a local ERIE agent today to learn more about Key Person coverage and other business continuation options.

From your favorite lunch spot to that funky art gallery, our local small businesses are a beloved part of what make our hometowns feel like home. We rely on them daily – and they need us, too. If you’ve got a little extra to spare these days, here’s how you can help out your local small businesses.

How to Support Local Businesses Anytime of Year

1. Buy local whenever you can. When it comes time to stock up on pantry staples, think about supporting that mom-and-pop shop first. The American Independent Business Alliance (AMIBA) has fascinating data about how locally owned businesses generate larger “local economic multipliers.” Your support might make a bigger impact than you think.
2. Order takeout or delivery from your favorite local restaurants. Extra perk: No dishes.
3. Buy gifts for friends or family. Is it crazy to think about starting your holiday shopping in the spring? You’ll thank yourself later – and, hey, it’s something to pass the time! (Read our list of tips for safe online holiday shopping.)
4. Leave a generous tip. Servers and bartenders rely on tips. If you have it to spare, throw a few extra dollars their way. (And don’t forget to tip the delivery driver!)
5. Buy merch or other gear. We get it – you can only order so much takeout, especially if you’re not getting your usual number of steps in. Think about buying a coffee mug, T-shirt or ball cap to show some local love.
6. Buy some cool art. Websites like Etsy make it easy to search by location and find artists in your community. Some local artists might be doing “draw-alongs” or other livestreams. Add them to the list of folks who would appreciate a digital tip, too. (Keeping the kiddos occupied with art projects of their own? Read our list of 5 stylish ways to display children’s artwork.)
7. Leave a positive review. If you’re short on cash, boosting a local place’s reputation is worth its weight in gold. While you’re at home, type up a couple good comments for your favorite spots to leave on social media or search engines.
8. Check with your local chamber of commerce or small business association. Local groups might be planning events, discounts, or promotions unique to your area. Get connected and see what’s happening in your neighborhood.
9. Pay it forward. If you’re fortunate to have some steady cash flow right now, remember that others might not. Consider treating the next person in line behind you – or making a donation to a charity that helps the less fortunate in your community.
10. Buy gift cards or gift certificates. Stock up now and treat yourself to a night on the town. For places you rely on regularly – for example, your hair salon – buy an extra service or two now if you can, since you know for sure you’ll use it in the months ahead.