Liability insurance protects your business assets in the event you are sued. Lawsuits are very common today, so you need to maintain an adequate amount of liability insurance to protect your business. Your company can be sued for anything that results in injury or property damage to someone else.

Liability insurance pays the cost of the damages and the legal fees and costs associated with your defense. The expense of defending yourself in a lawsuit can be quite high, regardless of whether or not you deserve to be sued.

Liability insurance will not protect you from claims of nonperformance of a contract, wrongful termination, sexual harassment or race and gender lawsuits. You can take out employment practices liability insurance to protect your business form employment-related claims.

It is hard to figure out how much liability insurance your company needs. There are guidelines that you should consider, but there is no standard formula. You should make sure you have an adequate amount to protect your business. Discuss the issue with your insurance agent and check for coverage recommendations from your trade association.

Some occupational licenses require you to carry a set amount of liability insurance. Business property leases can also require you to carry liability insurance. Buy what you can reasonably afford. The cost of insurance is far less than the cost of a lawsuit.