When do I need premises liability insurance?
Many property owners and business owners consider premises liability insurance when they own or rent commercial property that people other than employees visit, including:
- Customers/clients
- Suppliers
- Delivery services
- Cleaners
How premises liability works with ‘duty of care’
As the business owner, you are held under the concept of “duty of care,” which means you have a legal obligation to make your business safe for visitors.
When it comes to premises liability and the level of “duty of care,” the law divides visitors to your business into three categories:
Invitees
Invitees are people you invite or expect to come into your business, such as customers, clients or guests.
They are owed the highest duty of care. You should do your best to ensure that every aspect of your business they interact with is safe.
This goes beyond just eliminating obvious hazards like water on the floor. For example, if a customer comes to your business and sits in a chair and it breaks because of a defect, you could be held responsible for their injuries.
Licensees
Licensees are people you might not expect, but are welcome at your business. A delivery person or utility worker is included in this category.
They are owed a lower duty of care compared to invitees but can reasonably assume that it’s safe to be on your premises.
Trespassers
Trespassers are people you don’t expect or want on your premises.
Generally, trespassers have no right to sue for personal injury if they get hurt on your property, with one exception being children hurt by an “attractive nuisance.” An “attractive nuisance” is anything that might tempt a minor onto your premises like a pool or trampoline.
Children aren’t allowed to trespass, but if it turns out that they get injured on an “attractive nuisance” that you made no effort to make secure, you could be found responsible for their injuries.
What happens if your business does not meet duty of care requirements
If someone is injured at your business and you are accused of not meeting the duty of care, you could face a personal injury lawsuit.
Premises liability insurance can potentially help with court costs, medical bills and settlements (up to your policy limits).
An important consideration — Each business and accident is unique. Read your policy documents closely when you are shopping for business insurance to make sure you have the premises liability coverage that is best for your business.
How does premises liability insurance differ from other coverages?
While premises liability insurance can help cover expenses related to accidents that happen to visitors at your business, business owners with physical properties can protect themselves with these coverages.
General liability insurance
You can think of premises liability insurance as a part of general liability insurance.
General liability can help cover injuries and damage to property that doesn’t belong to you at your business (aka your business premises).
So yes, general liability overlaps with premises liability insurance.
For example, if someone trips and falls in your office, your general liability insurance could help cover their medical expenses.
Premises liability insurance coverage is important to consider if you’re running a small business that has visitors of any kind.
For many small businesses, a general liability policy can provide the coverage needed for protection against financial losses after an accident.
Commercial property insurance
Although premises liability insurance helps shield you in case someone gets hurt on your property, it doesn’t protect damage to the property itself. Commercial property insurance is for those who own or rent property for their small business.
Commercial property insurance can help protect almost all of the things you need to do business, including your equipment, inventory, furniture and other items.
This coverage can also help protect you against losing business income and related expenses if you have to temporarily close due to fire, water damage or another event covered by your policy.
Business owner’s policy (BOP)
A business owner’s policy is a package that combines general liability and commercial property insurance, offering a cost-effective solution for small businesses.
BOP covers goods, gear, inventory, and structures owned by the business, as well as general liability risks. Liability coverage can include damage to other people’s property, injuries to customers or vendors, and legal fees.
By bundling these policies, business owners can save money and easily manage their coverage, add insureds, and share certificates online.
