Premises liability insurance is an insurance policy that covers accidents that occur on your business premises. Most business owners don't know that doesn’t always mean the physical location of your business—it can also include where you work. This means your office parking lot, paths leading to your office building, and even the land. So as the business or property owner, how do you protect your customers? With the right business insurance.
What Premises Liability Covers
Premises liability coverage protects your business and your clients:
- Bodily injury: If someone is hurt on your property, it can cover their medical expenses
- Third-party property damage: If a shopping cart slams into someone’s car, you can be held responsible to pay for the damage because it occurred on your property.
- Defense costs + legal settlements: If a customer sues you for the injury that occurred, your insurance company can provide you with legal representation and will often cover settlement costs.
- Medical costs: Your insurance will cover medical bills for an injured client up to the specified policy limits per incident.
What Isn’t Covered by a Premises Liability Insurance Policy?
Premises liability would cover a slip and fall accident for a customer, but here are some circumstances where an accident would be excluded:
- If one of your employees falls off a ladder, it would be covered by workers’ compensation insurance—not premises liability.
- If damage occurs to your property, it would be covered by commercial property insurance.
- If a customer is harmed because of a professional error (i.e. a physician misdiagnoses a patient) it is covered by professional liability insurance.
Who Does Premises Liability Coverage Protect?
If you’re the owner of your business property or leasing your space, you’re legally required to make sure it’s safe for visitors to your business. But who qualifies as visitors?
- Invitee: An invitee is a person who is specifically invited onto your property (i.e. a customer). You must take reasonable precautions to make sure they’re safe.
- Licensee: This may not be someone you explicitly invited to your property, but it’s still a person permitted to be there such as delivery persons, utility workers, or postal workers. These people must take precautions against hazards, though you’re still expected to make sure your property is safe for them.
- Trespassers: A trespasser is a person who was not invited into your business. Because they’re trespassing, you’re usually not required to assume responsibility for their safety.
If an invitee or licensee is injured on your property, you may be held legally liable for that injury. That means you’ll have to cover their medical expenses and legal settlements. That’s why premises liability insurance comes in handy.
Who is Responsible for the Accident?
Do you work in a building with shared office space? Or lease a building? If an accident happens in a common area, in some cases your leaseholder may likely be liable for the injury. However, if you lease a building, you may be responsible to maintain and care for the building AND the parking lot. If a customer is injured on their way into the store, you may still be liable.
Make sure you look closely at your leaseholder agreement. It will often be explicitly spelled out who is responsible for what. If the property owner lists in the agreement that they will maintain the cleanliness of the parking lot, they might be responsible for an accident instead of you.
What’s the Difference Between General Liability and Premises Liability?
General liability insurance policies include coverage for premises liability. However, the courage is usually limited to a certain dollar amount. Premises liability often covers more than your general liability policy would.
What Does General Liability Insurance Cover?
General liability insurance—also known as slip and fall coverage—protects your customers when they’re on your property. It protects your business if you’re accused of third-party bodily injury, third-party property damage, and personal injury (libel, slander, copyright infringement).
Example: You run a small local grocery store. You make every effort to make sure any spills or messes are immediately cleaned, but even the slightest wet floor can cause a customer to slip and fall. You’re liable for their injury but if you have general liability insurance—or premises liability insurance—the insurance company will pay for their medical bills and settlement costs if necessary.
Do You Need Premises Liability Coverage?
You may be wondering, if premises liability is included in general liability coverage, why would you need an additional policy? General liability policies don't often include extensive coverage for premises liability. If you believe your business is at an increased risk for accidents, it may be wise to consider a premises liability insurance policy. Some property owners may require anyone leasing from them to get this coverage as well.
How to Reduce Premises Liability Claims
You must make every reasonable effort to maintain safe conditions for any people who may be on your property. What does that look like?
- Maintain your land/property by clearing debris after a storm, removing snow, and making sure your parking lot and walkways are free of ice.
- Make sure your stairs are sturdy and have proper guard rails.
- Promptly clean up and spills or accidents and place “wet floor” signs out when appropriate.
- Post warning signs of potential hazards that clients must be careful around.
- Make sure elevators and escalators are in proper working order.
- Routinely check your property for water leaks and plumbing issues.
- Monitor for chemical spills or anything else that may be considered a toxin.
- Make sure all floors are free of debris, loose flooring, and other trip hazards.
- Maintain adequate building security whenever possible (i.e. have security guards on the premises, security cameras, the ability to lock doors, etc.)
- If you own an apartment building with a swimming pool, make sure all possible precautions are taken to prevent swimming pool accidents.
When all else fails, make sure you work with an insurance agent to determine your level of risk. They can help you buy the appropriate coverage to protect your small business.
Get a Free Insurance Quote
We know it can be stressful as a business owner to make sure you're properly protected. Our goal at Tivly is to simplify the process and help connect you with industry experts to get the insurance you need. If you're looking to add a premises liability policy to your business insurance lineup, let us help! Complete the form at the top of the page or give us a call at 877-907-5267 to get a free quote for coverage.