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Starting off with a business is a noble idea, provided the person looking to do so has taken appropriate preparatory steps. One of those steps is arranging for a suitable liability insurance coverage to safeguard the business interests in situations when a customer files a lawsuit against the business in question. This not only saves the business from the financial doldrums but also provides the businessman a lot of confidence in the conducting the business activities.
Functionality
Unlike other types of financial coverage, liability coverage comes into play only when a business is sued by a customer or a client for any reason. This is more pertinent in case of small or medium scale business ventures, which are either sole proprietorship or partnership businesses. These trades are not as structured and as articulated as the corporate or large scale ones to provide enough security to the assets of the business. Hence, these trades easily fall prey to the legal wrangling from customers. These at times become so tricky that even the assets of the business are put at stake. This is where the pertinence of liability insurance comes into play.
Types
This type of financial assurance scheme is available in three forms or varieties - general, professional and product. Each of these three forms has their own ambit of functionality and its own terms and conditions.
The general variety as the name suggests, is meant to provide financial coverage in case any customer files any injury lawsuit or sues the business in the event of any property damage or monetary claims for advertisements. This particular type of monetary coverage is also referred to as commercial general liability or CGL and is availed by specialized professionals like accountants, computer professionals and medical practitioners.
Professional variety helps in protection of professionals like doctors and computer or software against mistakes that they may commit while offering their service. This variety also protects medical practitioners from accusations of medical malpractice and other alleged activities that might jeopardize the safety of their patients.
Product liability, on the other hand, is designed to provide legal protection to the manufacturer of the product in case any consumer claims injury or any harm resulted from availing the product or service.
Benefit
Availing this type of financial coverage has got a string of benefits. In case any business is sued by a customer, this coverage will provide enough safety and security to the business to counter the lawsuit and cover the legal fees. Besides, this will also help the business to enjoy considerable savings and protect the assets and property. In particular, the corporate variety is designed to separate the assets of the business from that of the owner. Therefore, even if the business runs into any rough weather, only the assets pertaining to the business (but not the owner) will be subjected under the lawsuit, provided the owner is not involved in any criminal activity.
Naturally, it is imperative that a person, who is vying to start off with a business, needs to know all the pros and cons of Liability Insurance so as to make sure that he has the safeguard against all the potential threats just like a traveler, who takes guard with the help of travel insurance.
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