| NYC Business Group
An Easy Guide to Vendor Liability Insurance Requirements
All vendors, contractors, artisans or service providers are required to have insurance. Insurance policies are crucial in covering any claims or losses the service providers or vendors are responsible for. Therefore, if you are dealing with the public, it is important to purchase relevant insurance policies to protect yourself against possible lawsuits. If you are in the food industry, you are at risk of liability lawsuits, and you should consider talking to your insurance agent to understand ways you can protect yourself. For example, if you have an ice cream shop and someone gets sick after buying and eating ice cream from your shop or truck, you can face a lawsuit. Also, if someone trips, falls and gets injured on your premises, you are at risk.
Regardless of the products or services you offer, damages can occur. When that happens, you should be ready to avoid potential financial loss. Luckily, there are numerous insurance options for vendors. If you need more clarification, it is important to talk to your insurance agent to avoid future legal issues.
What amount of vendor insurance should you purchase?
The vendor insurance amount varies from venue to venue, depending on what you are selling. Typically, venues specify the amount of liability insurance you must purchase before you are allowed to sell your products. Also, you must sign a vendor contract specifying the rules and requirements of the agreement. The venues are looking to protect themselves against potential lawsuits. Therefore, they must have a legal contract with the type of insurance policies vendors should have and minimum coverage.
Your vendor will indicate the minimum per occurrence limit, i.e., coverage for a single claim and aggregate limit, i.e., coverage for all the claims. You will notice that venues will request a certificate of insurance. A certificate of insurance (COI) is a standard form issued by the insurance as proof. COI includes vital information such as the type of insurance and the limits.
Do you know what additional insured is? Most venues require vendors to name them as additional insured. The main objective of additional insured endorsement is to offer additional protection to the venue. Anything can happen, and the venue can protect themselves against liability claims only by being named additional insured. It is crucial to note that additional insured comes at an extra cost. Brace for that.
What type of insurance policies should you consider as a vendor?
General Liability Insurance (GLI)
GLI is one of the smartest investments you will make as a vendor. The policy protects your business from all costs incurred through non-professional acts of negligence. What do we mean by this? General liability insurance kicks in when your business causes property damage or personal or advertising injury. The policy covers medical expenses, compensatory damages and punitive damages up to the policy limit.
Commercial Property Insurance
The policy covers replacing or repairing any stolen or damaged business property. Therefore, consider investing in commercial property insurance to avoid incurring heavy losses when your supplies, equipment or inventory is damaged or stolen.
Business Owner’s Policy (BOP)
BOP combines general liability insurance (GLI) and commercial property insurance. Hence, it is a way of saving money while getting coverage. The policy covers damage to your property and third-party claims from customers.
Commercial Auto Insurance
If you own business vehicles, commercial auto insurance is a good investment. It covers accidents involving business-operated vehicles. Sometimes, the policy can cover damages incurred from theft or vandalism.
Product Liability Insurance
As a vendor, everything can go wrong and protecting yourself from lawsuits is prudent. With product liability insurance, you get coverage from lawsuits claiming your product caused property damage, illness or injury.
Cyber Risk Insurance
The policy protects you from any costs incurred from a data breach, malicious software attacks and cyber hacking. Depending on the policy and insurer, it can also cover other expenses like legal fees, fines, credit monitoring and customer notification. If you are handling sensitive customer data, cyber liability insurance is recommended.
Liquor Liability Insurance
Vendors who sell alcohol should have this coverage because it covers legal fees, medical expenses and property damage incurred if a patron damages property or injures others.
Workers’ Compensation
The policy covers medical treatment and lost wages if an employee is sick or injured at work. It is important to understand that different states have different workers’ comp laws. Check with your insurance agent to determine the way forward.
Excess Liability Coverage
Also known as umbrella coverage, the policy protects you from costs exceeding other policy limits. If your coverage limit cannot cover medical expenses, legal and other incurred costs, umbrella coverage kicks in. It is a vital policy to purchase regardless of the size of your business.
Final thoughts
As a business owner, most insurance policies will end up unused. Although it might seem like a loss, you better have it and don’t need it instead of needing it, and you don’t have it! You will have peace of mind knowing you are covered if the unthinkable happens. Give us a Call Today for a Free Quote!