The Lowdown on Liability Insurance

A lot can happen on a job that could bring a lawsuit your way, whether you’re at fault or not. Make sure you’re protected.

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Liability insurance protects individuals or businesses from financial loss if they're sued and held liable for any actions they may have taken or failed to take. For a plumber, this can mean protection from suits after unknowingly installing a defective part or damaging a customer's property due to unforeseen accidents.

All plumbing business owners need a combination of three types of insurance: workers’ compensation, property and general liability. The liability policy may have the most far-reaching coverage of the three, ensuring protection under a variety of different circumstances. Here’s a rundown of the details on liability insurance from

Property Damage

No matter how careful and well-trained you (and your team) are, never rule out the possibility of accidentally damaging a client's property. You could damage older plumbing or even break through municipal pipelines beneath private property. Any damage you cause, even accidentally, can result in a lawsuit if the other party involved isn't open to calm negotiation and settlement. Going to court could cost more than your company can afford, whether the damage was your fault or not. Liability insurance will take care of this problem, paying court costs and damages if you're found at fault.

Bodily Injury

Workers’ compensation pays lost wages for employees injured on the job, but what about potential clients injured on your business premises? A bodily injury clause in your insurance will cover any medical expenses you might have to pay in that instance. It also covers injuries caused by you or your employees on a job site. This part of the policy will pay medical expenses to the injured person, up to a specified amount.

Completed Project Liability

If damage occurs due to faulty parts after you've completed a project, the client can still sue you for damages. Also, a client might complain that you didn't actually finish the job or that it wasn't finished to their satisfaction. Any unsatisfied customer complaints can be covered by completed project liability coverage. It takes away the danger of clients filing suit months or years after a completed job. This essential part of your policy acts as a cushion against lawsuits far into the future that otherwise wouldn’t be covered.

Advertising Injury

In this litigious world, it's not completely unheard of for companies to sue other companies simply because they see advertising as damaging to their business. If your ads claim you're the best in town, citing your years of experience, a rival may decide to sue you because those ads hurt his business. These lawsuits are usually nuisance suits with no basis in fact, often filed by unscrupulous business owners wishing to damage their competition, but you'll still have to fight them. An advertising injury clause in your liability coverage can cover legal fees and court costs that might otherwise damage your company's bottom line.

Specialized Coverage

The basic liability policy covers most instances where you might find yourself in legal trouble, but no policy is one-size-fits-all. Depending on what you own and the services you offer, look for additional coverage for your more specialized needs.

  • Errors & Omissions Insurance: This policy is used when traditional liability coverage doesn't apply. It protects you if a client sues you for accidents on the job, steps you may have forgotten to take, or negligent acts. Everyone on your crew is a human being and humans make mistakes. This type of coverage insures against such mistakes costing you large sums of money.
  • Underground Insurance: If you dig sewer lines from clients' yards, you may not realize you need this type of insurance. Normal policies won't cover underground work, even for the smallest amount of digging. Make sure your policy covers both underground work and underground work with workers inside. The difference can be crucial if accidents occur.
  • Injury to Subcontractors Insurance: If you hire subcontractors for part-time or specialty work, they won't be covered under workers’ compensation laws in your state. This means that if they're injured on the job, you won't have to pay their lost wages, but they'll be free to sue you for medical bills and lost work. This policy is a good cushion to have if you regularly subcontract work, especially in cases where the injured worker would obviously be covered if he was an employee.


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