Do We Need Legal Insurance For Our Business?

All businesses must provide Workers' Compensation coverage for the benefit of their employees who may be injured while on the job. This is a requirement of the law in every state. For most businesses, this requirement is satisfied by purchasing Workers' Compensation insurance, which is available from private insurance companies in most states.

In a few states this coverage must be purchased from an agency of the state government. Often there will be contractual requirements for businesses to have certain types of insurance. For example, the terms of a lease for an office or store or factory usually will require the tenant to have certain types of insurance to cover its operations conducted on the leased premises.

If a business borrows money, the loan documents often will require that a specified amount of insurance must be maintained to cover the business's property and liability exposures. Leases for office equipment may require insurance to cover potential damage to the equipment. All contracts and leases entered into by a business should be carefully reviewed for insurance requirements.

Failure to maintain the required insurance could be a basis for termination of the contract or lease; Because of frequent contact with the public and because of the specialized work done by many businesses, there is usually a much greater exposure to legal liability arising from the conduct of a business compared with the potential for legal liability from personal activities.

It is therefore advisable for most businesses to purchase liability insurance to cover all business related activities, and this insurance should be specifically tailored to the type of business being conducted. This is especially important for professionals, such as health care workers, architects and engineers, who face a greater level of potential legal liability (often called "malpractice") because of the highly specialized and technical nature of their work.

In some states, professional liability or "malpractice" insurance may be required as a condition of getting the necessary license to practice the profession in that state.

Is always a good idea to protect yourself and your business with insurance. It seems to us legal insurance is just as important as the air you breathe. Never go with out all the legal help you can get; you can't never be to safe!

Whether you need insurance depends on your business activities and the amount of liability exposure that your business has. In addition, insurance may be required for employees (such as worker's compensation insurance, state disability insurance, or unemployment insurance).

Some common forms of business insurance include:

(1) commercial multi-peril policies (covering a variety of exposures)

(2) liability insurance covering premises, activities, and products

(3) business interruption insurance

(4) surety and performance bonds

(5) employee fidelity bonds

(6) malpractice and errors and omissions coverage

In deciding whether to purchase insurance, an analysis of your risk exposure should be performed.