Lawsuits can be quite costly. Even if you’re a business, going through a lawsuit would be hard on your finances. Companies can be sued for different reasons, even small ones. If you own a business and you’re afraid of what would happen in case of a lawsuit, you might be looking into business insurance right now. 

But does business insurance cover a lawsuit? The truth is that it varies from one case to another. Each type of policy is different and will cover various things. If you are looking to get business insurance right now or you have one and want to know how it can protect you in case of a lawsuit, you’ve come to the right place. 

Can Business Insurance Cover a Lawsuit?

Business insurance can cover a lawsuit. Nevertheless, it depends on the type of insurance. While some policies will offer you protection when your business is sued, others will not. General liability insurance is perhaps the most common insurance type that businesses opt for. It’s not only quite affordable, making it more accessible for small businesses, but it is also useful. 

This particular policy will cover some lawsuits. More specifically, it will deal with any lawsuit started by someone outside the company, such as cases that involve copyright infringement, property damage, bodily injury, or defamation. 

There are other types of lawsuits that will not get coverage. Anything including lawsuits for discrimination, employee injuries, or professional mistakes will not get any coverage from the general liability insurance. 

Fortunately, this is not the end of it, because while not covered under this policy, they can be covered by other insurance types. 

What Types of Insurance Can Cover Other Lawsuit Types?

If you want coverage for multiple types of lawsuits, you should consider checking out these insurances:

• Employment Practices Liability Insurance

An employment practices liability insurance will offer you coverage when you’re dealing with a lawsuit involving discrimination, harassment, and different other employee rights violations. When you have a well-established business with a large number of employees, this can be a very good investment. 

For the policy to help you with coverage for a lawsuit, it must already be active at the time of the incident. Overall, it’ll cost you around $2,178 per year to get this coverage. 

• Cyber Liability Insurance

When your business is dealing with a data breach, cyber liability insurance can be very useful. You can get two types of cyber liability policies, respectively first-party cyber liability insurance and third-party cyber liability insurance. 

This policy can cover legal costs and damages in different situations, such as:

• Cyberextortion demands
• Monitoring services for credit and fraud
• Finding a security flaw and fixing it
• Regulatory penalties and fines
• Customer breach notifications
• Crisis management and public relations

You can get this insurance policy by paying $1,675 per year, which means $145 monthly. However, depending on how much data your business has and what type of data it deals with, the price might vary. 

If you own a business that handles sensitive information and stores it, then cyber liability coverage is very important. Who knows, you might be sued for a data breach if something happens. 

• Hired and Non-Owned Auto Insurance

Does your business involve the use of vehicles? Perhaps your workers use their own cars in order to do their job. If that’s the case, then having hired and non-owned auto insurance is very important. 

Basically, if accidents occur when using personal vehicles or even leased or rented ones, this type of policy can cover property damage liability and bodily injury liability. 

How much this type of insurance costs depends on a few factors, such as the driving records of the employees, the vehicle types used, how many vehicles are used for the business, and so on. 

• Directors and Officers Insurance

This type of policy is useful when you want protection for the corporate officers and board members in case they are sued for decisions taken for the business. It can cost $5,408 per year or $451 per month. 

The insurance type will protect you when dealing with lawsuits related to mismanaged funds, employment practices, not complying with industry regulations, not following corporate bylaws, and libel or infringement of intellectual property. 

Final Thoughts

With so many businesses out there, business insurance becomes a must. For example, in 2021, Wisconsin was home to 461,525 small businesses. If you are one of them, you need to start looking into good business insurance to be protected in case of a lawsuit. Talk to Milwaukee business attorneys, as they will be able to guide you toward the right insurance type.