Owning and operating a small business comes with plenty of responsibility and accountability. Even if you operate with the utmost care and provide the best quality and services, a client can perceive you did them wrong. Is your business protected with liability insurance? Learn what all successful business owners know about small business liability insurance.

Business liability insurance protects your small business in the event of a lawsuit for personal injury or property damages. It will usually cover the damages from a lawsuit along with the legal costs. Depending on your business needs, liability insurance can be purchased in many forms.

General Liability Insurance: This form of business liability insurance is the main coverage to protect your business from: injury claims, property damages, and advertising claims. General liability insurance also known as Commercial General Liability (CGL) may be the only type of business liability insurance you need depending on your business situation.

As a business owner, you need the same kinds of insurance coverages for the car you use in your business as you do for a car used for personal travel -- liability, collision and comprehensive, medical payments (known as PIP, personal injury protection) and coverage for uninsured/underinsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the "principal insured" rather than your name. This will avoid possible confusion in the event that you need to file a claim or a claim is filed against you.

Whether you need to buy a business auto insurance policy will depend on the kind of driving you do. A good insurance agent will ask you many details about how you use vehicles in your business, who will be driving them and whether employees, if you have them, are likely to be driving their own cars for your business.

While the major coverages are the same, a business auto policy differs from a personal auto policy in many technical respects. Ask your insurance agent to explain all the differences and options.

If you have a personal umbrella liability policy, there's generally an exclusion for business-related liability. Make sure you have sufficient auto liability coverage.

Although you may already have insurance to cover your business premises, this usually only covers the buildings themselves and not the contents inside. For this reason you may also need to take out Contents insurance if there is a risk that anything could be damaged, lost or stolen.

Anything the business needs to function properly should be covered by a Contents insurance policy. Contents insurance is not compulsory but often recommended if your company owns expensive items that may need replacing.

All equipment and stock on the premises should be insured, even if it is not owned by the business, except for portable equipment which is usually insured separately.

What Coverage does a Business Contents Insurance Policy Provide?

There are two standard types of Contents coverage available:

• Indemnity insurance
• Replace as new

With an Indemnity coverage policy the insurance company will take depreciation into account when settling a claim. This means the amount you receive will depend on how long you have owned the product and/or the wear and tear rather than the amount you originally paid for it. An indemnity insurance policy will usually insure your contents if stolen; however, there must be proof of a forced entry in order for this to apply.

If you take out a 'replace as new' insurance policy items will be valued at their price in the current market.

Where the business premises are owner occupied, contents and building insurance may be bundled together under one policy. Where the business premises are not owner occupied, the tenant will have to arrange contents insurance under a separate policy.

Stock should be insured for cost price without profit, and provisions can be made for seasonal stock fluctuations. Equipment can be insured for replacement as new or on the indemnity basis where an allowance for wear and tear is deducted in settling any claim.

Even minor damage to your property could seriously disrupt your business, leading to loss of income and extra expenses.

Business Interruption insurance will compensate for the shortfall in gross profit together with paying any increased working costs and extra accountants' fees incurred.

The money lost in the event of an emergency or other event can be devastating for a company. If an organization has to shut down temporarily due to a disaster, Business Interruption insurance will cover income that would have otherwise been generated, using the financial records of the company, had they not had to close down. This will also cover operating expenses, such as utilities, while the doors are closed.

No Business Interruption insurance policy is going to provide your company with compensation over a long period. Most policies only cover a number of weeks or a few months at most. The idea is that you are being covered for an interruption - not simply for lack of business due to the prevailing economic circumstances.

Specifically, a Business Interruption policy will cover you for:

• losses due to sudden personal incapacity
• losses due to a sudden and unforeseen natural disaster (e.g. flood damage, fire, storms)
• losses due to local government action (e.g. road works)
• losses due to theft and vandalism
• IT failure

Unlike other forms of insurance (e.g. Fire and Theft), with Business Interruption insurance you are not insuring actual goods. Consequently you will need to have a very good idea of how much your business earns to assess accurately the amount of your potential business losses.

Employers have a legal responsibility to their employees to make the workplace safe. However, accidents happen even when every reasonable safety measure has been taken.

To protect employers from lawsuits resulting from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents, in almost every state, businesses are required to buy workers compensation insurance. Workers compensation insurance covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses.

Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitation services. It also provides death benefits to surviving spouses and dependents.

Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered. For example, in most states there are regulations that cover whether the worker or employer can choose the doctor who treats the injuries and how disputes about benefits are resolved.

Workers compensation insurance must be bought as a separate policy. Although in-home business and Business Owners Policies (BOPs) are sold as package policies, they don't include coverage for workers' injuries.

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