If you own a small business in the Ocean State, this information will help you understand Illinois Commercial Liability insurance and protect your business and your personal assets from legal claims and settlements that can spell financial ruin. Having sufficient general liability insurance is an important part of any small business plan in Illinois.
A small business is defined as any company with fewer than 500 employees. Of Illinois’s 1.1 million small businesses in 2008 (the latest data available), 255,769 were small employers, accounting for 48.4% of the state’s private-sector jobs. Another 874,540 were one-person operations with no employees.
Source: SBA Illinois Small Business Profile 2010.
About Commercial Liability Insurance for IL Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Illinois business from financial loss resulting from claims of injury or damage cause to others by you or your employees. A policy typically covers:
Bodily Injury – physical damage to a person other than an employee at your place of business and injuries caused by you or an employee at a client’s home or work place.
Property Damage – damage caused by you or an employee to someone else’s property.
Personal Injury – libel, slander, copyright infringement, invasion of property or privacy, wrongful eviction, false arrest and similar acts that cause damage to a person’s reputation or rights.
Advertising Injury – losses caused by your advertising
Legal Defense and Judgments – costs to defend against real and frivolous suits and judgments up to the limit of your coverage. Note this generally does not include punitive damages for negligence or willful misconduct.
Illinois Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Illinois. However, the state has a reputation for lawsuit abuse according to the Illinois Lawsuit Abuse Watch website, which notes that the states litigation climate ranked worst in the country in the June 2088 issue of “Directorship.” It also cited that in 2005, small businesses in the state typically spent about $5,000 to settle a legal dispute – about 10% of a small business owner’s average annual income. Accidents and lawsuits (legitimate and frivolous) do happen in The Land of Lincoln. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your Illinois business to limit your risk exposure.
How Much Illinois Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Illinois business you operate or products you manufacture should determine how much Illinois commercial general liability insurance you need. A good rule of thumb for most small businesses is between $500,000 and $1 million. However, if yours is a high-risk business such as the building trades or has a high volume of interaction with the public such as a restaurant or retail business, you should consider increasing your coverage. Note that if you operate out of your home, your homeowner’s or renter’s insurance has limited coverage for business liability and loss.
How Are Premium Costs Assessed?
Illinois commercial liability insurance premiums are based on a number of factors including the types of service or products you provide, the number of people you employ, how long you’ve been in business, and your claims history. Coverage is typically capped at a specific dollar amount for your policy period.
Other Insurance to Consider for Your Illinois Small Business
Illinois requires that anyone who employs at least one person, whether full or part time, carry workers compensation insurance. Sole proprietors are not required to carry workers compensation. Other exemptions may be available.
Illinois mandates that employers provide employee disability coverage to provide disability income for employee off- the-job illness or injury for up to six months, starting on the seventh day of an illness or injury.
Illinois requires that all drivers carry minimum automobile insurance. If you use your car or truck for business, it is recommended that you purchase a commercial vehicle policy.
Employee Disability Coverage
BOP – Business Owner’s Package
E&O – Errors & Omissions
EPLI – Employment Practices Liability Insurance
Commercial Property Insurance
Regulating Agency and References
Illinois Department of Insurance
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage.
Division of Insurance – Chicago
Department of Financial and Professional Regulations
100 W. Randolph St., Suite 9-301
Chicago, IL 60601- 3395
Illinois Small Business Administration
The SBA is an independent agency of the federal government created to aid, counsel, assist and protect the interests of small business concerns and maintains Illinois offices in Chicago and Springfield. Get links to district offices at http://www.sba.gov
National Association of Insurance Commissioners (NAIC)
This is an organization of insurance regulators from the 50 states, District of Columbia and the five U.S. territories. NAIC provides a forum for the development of uniform policies when appropriate. It also offers an online form for filing complaints, reporting suspected insurance fraud and downloading key financial information about insurance carriers at www.naic.org
Insurance Information Institute (III)
This organization’s mission is to improve public understanding of insurance – what it is and how it works. Visit III at www.iii.org