Business insurance
What is liability insurance, and which types does a business need?
Liability insurance pays when a business is held legally responsible for injury, damage or financial loss caused to someone else, including the cost of defending the claim. Different risks need different policies: general liability for injury and property damage to third parties, professional indemnity for advice, D&O for directors’ decisions, cyber for data and systems, and workmen’s compensation for injury to workers.
In short
- Liability insurance pays when a business is legally responsible for harm to others.
- It usually covers defence costs as well as compensation.
- Each risk has its own policy: CGL, PI, D&O, cyber, WC and more.
- Contracts often require specific liability cover.
What is liability insurance?
Insurance against the claims other people make against your business. If a customer is injured at your premises, a client says your advice cost them money, or a regulator pursues your directors, liability insurance pays the compensation and the legal costs, up to the policy limit.
The main types of liability insurance for business
| Policy | What it covers |
|---|---|
| Commercial general liability (CGL) | Injury or property damage to third parties from your premises or operations |
| Product liability | Harm caused by a product you make or sell |
| Professional indemnity (PI) | Claims that your advice or service caused a client a financial loss |
| Directors and officers (D&O) | Claims against directors and officers over decisions made in their roles |
| Cyber | Data breaches, attacks and the liability that follows |
| Workmen’s compensation | The employer’s legal liability when a worker is injured or killed at work |
Which ones does my business need?
It depends on what could go wrong, and on what your contracts demand. A factory starts with workmen’s compensation and general liability; a consultancy with professional indemnity; a company with outside investors with D&O. Many enterprise customers now write specific liability cover into their contracts, so check those first.
Is liability insurance compulsory?
Some is. Liability to workers is statutory, which is why a workmen’s compensation policy matters, and businesses handling hazardous substances face a statutory public liability duty. Most other liability covers are a choice, often made for you by a contract.
Frequently asked questions
What is liability insurance?
Insurance that pays compensation and legal costs when a business is held legally responsible for harm to others.
What are the types of liability insurance?
For businesses: commercial general liability, product liability, professional indemnity, D&O, cyber and workmen's compensation, among others.
Is liability insurance mandatory in India?
Some is, such as an employer's liability to workers and public liability for hazardous substances. Most other liability cover is optional, though contracts often require it.
What happens when you talk to us
A 20-minute video call with a Growth Advisor. No obligation, and no quote pushed. It opens with a five-minute video from our founder on how the benefits stack works and why Ethika exists; the rest is your questions. You’ll leave with an honest read on your current cover and claims experience, and a straight answer on whether we can genuinely help, even if you never become a client.
20 minutes with a Growth Advisor. No obligation.
A note on this page. Everything here is general information, not insurance, legal, financial or tax advice, and nothing is an offer. No insurer or product is named or recommended. What any policy covers depends on its own wording and schedule. For advice about your situation, talk to us.