If you own a small business in the Washington , this information will help you understand Washington Commercial Liability insurance and protect your business and your personal assets from legal claims and settlements that can spell financial ruin. Whether you work in Seattle, Spokane, Tacoma, Vancouver, Bellevue, Everett or anywhere else in the Evergreen State, having sufficient general insurance is an important part of any small business plan in Washington.
A small business is defined as any company with fewer than 500 employees. Small business is vital to Washington’s economic well-being, accounting for more than 98% of all state employers. Of Washington’s 548,896 small businesses in 2008 (the latest data available), 148,178 were small employers, accounting for almost 55% of the state’s private-sector jobs. Another 400,718 were sole proprietorships with no employees.
Source: SBA Washington Small Business Profile 2011.
About Commercial Liability Insurance for WA Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Washington 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.
Washington Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Washington. Washington is a pure comparative fault state. An insurance adjuster must first assess fault, and the adjuster or court will reduce any award proportionate to the fault of the plaintiff. Washington also holds that each defendant is liable for his or her share of the monetary award unless the plaintiff is not at fault at all. In that case, each defendant shares in the responsibility of all liable defendants. There are no caps for non-economic personal injury award in Washington, which the State Supreme Court has found would constitute an infringement of the right to trial by jury. The statute of limitations is 3 years for general personal injury and product liability. Accidents and lawsuits (legitimate and frivolous) do happen in Washington. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your Washington small businesses.
How Much Washington Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Washington business you operate or products you manufacture should determine how much Washington 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?
Washington 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 Washington Small Business
Washington requires that anyone who employs 1 or more persons, whether full or part time, carry workers compensation insurance. Sole proprietors with no employees are not required to carry workers compensation. Other exemptions may apply. Contact the Washington State Department of Labor and Industries for details of exemptions and compliance. www.lni.wa.gov/
Washington 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.
BOP – Business Owner’s Package
E&O – Errors & Omissions
EPLI – Employment Practices Liability Insurance
Commercial Property Insurance
Regulating Agency and References
Washington State Office of the Insurance Commissioner
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage.
Washington 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 offices in Seattle and Spokane. Get links to district offices atwww.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