If you are a small business owner, liability protection
insurance may be something you want to consider. Unfortunately, many people
overlook this type of insurance because they already have Workers’ Comp. Confusing
the two different types of insurance can be a big mistake and can end up
costing you money. But what exactly is liability protection and what is the
difference between it and workers comp? Let’s take a look.
What is Liability Protection Insurance?
This type of insurance coverage helps to cover the costs
of any legal fees if you should ever be sued by an employee or contractor. It
can help to protect your business against things like sexual harassment suits,
discrimination claims, retaliation claims, wrongful termination cases, or
deprivation of career opportunity charges.
Many people often skip this type of insurance because “it
would never happen to me”. But remember, you can be faced with an accusation
whether you are guilty or not. And all it takes is one disgruntled employee to
throw an accusation your way for you to face years of legals fees and
Who is covered under Liability Protection Insurance?
Protection insurance usually covers claims made against
any of your management personnel. In some cases, it may also protect other
employees. Liability insurance protects against claims made by employees and
former 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 and
recruitment process and during offers of employment. You are also at high risk
during times of training and orientation, performance reviews, and termination.
What’s the difference between Liability Protection
Insurance and Workers Comp?
The confusion between these two forms of insurance usually
comes stems from people thinking that workers comp covers everything. It
doesn’t. There are two parts of Worker Comp. Firstly, it pays for your
employees medical bills and lost wages if they face a personal illness or
injury. Secondly, it pays for legal expenses if an employee is ever injured at
work due to negligence on behalf of the employer. And this second part is where
people often confuse Workers Comp with Liability Protection. Where Workers Comp
covers legal expenses against injury, Liability protection covers legal
expenses against allegations.
Do I need Liability Protection?
If you are a business owner, small or large, you need
liability protection insurance. In cases of allegation, people can make a claim
regardless of whether you are guilty or not. So being a good person and
following all the rules doesn’t necessarily mean you are safe. In addition, you
can’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 – guilty
or not. So when it comes to protecting yourself and your business, it’s always
better to be safe than sorry.