Does business insurance cover lawsuits?

Yes, business insurance is designed to protect your company when legal issues arise. Claims related to injury, property damage, or your services and products can be covered, depending on the type of policy you have. With the right protection in place, you'll have peace of mind knowing your business is prepared for unexpected challenges.

How business insurance helps with lawsuits

At its core, business insurance can provide financial protection when your company is held legally responsible for certain events. A business lawsuit insurance policy could help cover expenses such as:

• Attorney fees
• Court costs and settlements
• Judgment costs if you're found legally liable
• Medical expenses for injuries your business causes

Lawsuit insurance for business can help reduce the financial impact of legal action and ease some of the stress and uncertainty business owners often feel during a lawsuit.

Does general liability cover lawsuits?

In many cases, yes. A general liability (GL) policy is usually the first line of defense when a business is sued. This coverage is designed to help with claims related to:

• Injuries to third parties, including customer slip and falls
• Damage to third-party property caused by your business operations or employees
• Harm resulting from products you manufacture or sell
• Defamation and false statements made by your company or employees

General liability is a foundational coverage for most businesses because it guards against lawsuits, but it's not the only option for small business owners. You can get the same liability protection in a business owners policy (BOP). Both GL and a BOP can help with a variety of legal issues, but you may need other coverages for lawsuits related to your advice, services, employees, data, and vehicles.

Other types of insurance for lawsuit protection

While third-party injury and property damage are common legal claims, businesses can be at risk for other types of lawsuits that might not be covered by liability insurance in a GL or BOP. Consider the following when deciding what type of protection you need:

• Employee injuries: Claims related to on-the-job injuries are covered by workers' compensation, which includes employers liability coverage. While employees who receive workers' comp benefits typically can't sue you for their injuries or lost wages, third-party claims may still arise.
• Employment claims: Suits involving allegations such as discrimination or wrongful termination require employment practices liability insurance (EPLI).
• Professional errors or malpractice: Companies that provide expert advice or services may need professional liability coverage, also known as errors and omissions insurance. If a client or customer claims you were negligent or provided harmful advice, this coverage can help pay legal defense costs.
• Commercial vehicle incidents: Commercial auto insurance covers lawsuits resulting from accidents involving company vehicles.
• Contract disputes: Contract disputes usually aren't covered, but professional liability insurance may help if the issue is caused by an error in how the contract was carried out.
• Cyber claims: Data breaches, privacy violations, or network security failures can lead to legal claims from affected parties, which would be covered by cyber insurance.

Does business insurance cover civil lawsuits?

Yes, that's what business coverage is designed to protect you from. The most common type of lawsuits businesses face are civil. Some examples of civil suits include customer injury claims, property damage cases, and allegations of false advertising.

If a group of people sue you collectively, alleging a product or service you provided caused harm, that's called a class-action lawsuit, and your business insurance can also cover those types of claims.

Does business insurance cover criminal lawsuits?

No, criminal lawsuits can only be brought by the government against entities accused of breaking the law, and they would not be covered by business insurance. However, there are instances where you may have some coverage, depending on the circumstances of the crime. For instance, if an employee commits fraud or embezzlement, you may be able to recoup financial losses if you have employee dishonesty coverage.

Choosing the right coverage for your business

Business insurance can help you manage the risk of lawsuits. To find the right policies, small business owners should:

• Evaluate risk: Consider the types of lawsuits most likely in your industry.
• Review exclusions: Make sure you understand what's covered and what's not.
• Consider supplemental coverage: Policies like EPLI or professional liability can fill important gaps. You can add these additional protections to a business owners policy, which includes basic liability coverage.
• Get expert guidance: Progressive Commercial can help tailor protection to your needs, whether you start with an online quote or work with an agent.

Get a business insurance quote from Progressive Commercial

So, does business insurance cover lawsuits? Yes, and many policies can help with legal defense costs, settlements, and judgments. Having the right mix of coverage helps protect your company's finances and reputation when facing legal challenges.

Explore your options with Progressive Commercial. With over 50 years of experience insuring small businesses, we understand your risks and can provide a customized quote for business insurance to protect you against lawsuits.