# What is Premises Liability Coverage … and Why Does Your Business Need It? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-10-19 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Why Your Business Needs Premises Liability Coverage Meta Description: Learn how premises liability insurance protects your business from third-party claims and the importance of upholding safety on your premises to avoid costly URL: https://financedigest.com/what-is-premises-liability-coverage-and-why-does-your-business-need-ithtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/what-is-premises-liability-coverage-1736814995722-compressed.jpg) Starting a business is a significant step with many benefits when done right. But it also comes with challenges that could result in its downfall and loss to a business owner. These challenges include the risk of someone injured at your premises, whether an employee, a customer or any other person that enters your premises legally. In most states, workers’ compensation [insurance covers](https://www.financedigest.com/japan-insurers-to-maintain-cover-for-lng-vessels-in-russian-waters.html "Japan insurers to maintain cover for LNG vessels in Russian waters") damages suffered by employees in work-related injuries. The only way of [protecting your business](https://www.financedigest.com/finalised-pan-european-data-protection-laws-set-the-new-standard-for-a-privacy-friendly-business-environment.html "Finalised Pan-European data protection laws set the new standard for a ‘privacy-friendly’ business environment") from third-party liability is by carrying premises liability coverage. ## But What Is Premises Liability Insurance? [Premises liability insurance](https://fitsmallbusiness.com/what-is-premises-liability-coverage/) covers damages suffered by customers, guests, and other persons entering your premises and getting into an accident. Under tort law, all [property owners are obligated to make reasonable efforts to ensure that their property is safe for people that enter legally](https://www.financedigest.com/property-letting-could-become-a-legal-minefield.html "PROPERTY LETTING COULD BECOME A LEGAL MINEFIELD"). If [property owners](https://www.financedigest.com/cost-certainty-sme-business-owners-guide-property-expansion.html "Cost Certainty – The SME Business Owner’s Guide to Property Expansion") fail to uphold their duty resulting in an accident, they will be liable for damages. ## Why Does Your Business Need Premises Liability Coverage Liability insurance deflects that liability to your insurer, [meaning your business](https://www.financedigest.com/interest-rates-are-cut-to-an-all-time-low-what-will-this-mean-for-small-businesses.html "Interest rates are cut to an all-time low. What will this mean for small businesses?") will not have to foot the bill resulting from damages suffered by your guests. Having premises liability [insurance doesn’t mean that you no longer need](https://www.financedigest.com/reasons-you-need-a-car-insurance-when-driving-in-thailand.html "Reasons You Need a Car Insurance When Driving in Thailand") to uphold safety on your premises. After a claim is made against [your insurance coverage](https://www.financedigest.com/types-of-insurance-for-yourself-and-your-family.html), you can have your premiums increase significantly, increasing the cost of doing business. ## A Client or Customer Could Sue if They Suffer Damages on Your Premises Not all accidents on your premises [result in the victim filing a claim for damages suffered](https://www.financedigest.com/will-global-commodities-suffer-as-a-result-of-brexit-the-experts-at-easymarkets-think-not.html "WILL GLOBAL COMMODITIES SUFFER AS A RESULT OF BREXIT? THE EXPERTS AT EASYMARKETS THINK NOT!"). Sometimes, the victim may feel like it’s not worth it and move on, especially for minor injuries. At other times, your [business and the victim](https://www.financedigest.com/how-to-ensure-your-new-business-doesnt-become-a-victim-of-covid-related-fraud.html "How to ensure your new business doesn’t become a victim of Covid-related fraud") can agree to resolve the matter amicably. But there are [situations where amicable resolution is impossible](https://www.financedigest.com/doctors-bankers-protest-impossible-situation-as-sri-lanka-runs-out-of-fuel.html "Doctors, bankers protest ‘impossible situation’ as Sri Lanka runs out of fuel"), and a client files a claim against your business. Victims will often have a [personal injury](https://www.financedigest.com/double-taxation-of-personal-injury-plaintiffs.html "Double Taxation of Personal Injury Plaintiffs") lawyer working with them. So it makes perfect sense to have an experienced personal injury lawyer from a reputable company such as [Munley Law](https://munley.com/) looking out for your rights. If you have premises liability coverage, your insurance provider will have a lawyer, so you may not [need to hire](https://www.financedigest.com/5-key-things-you-need-to-know-before-hiring-your-first-employee.html "5 Key Things You Need to Know Before Hiring Your First Employee") one. ## How Premise Liability Insurance Applies The people who access your premises fall into three classes; invitees, licensees, and trespassers. Premises liability applies differently to each of these classes. ### Invitees An [invitee is someone that has had an express invitation](https://www.financedigest.com/emvco-invites-the-payments-community-to-gain-insight-into-latest-initiatives.html "EMVCo Invites the Payments Community to Gain Insight into Latest Initiatives") to your premises. An invitation to a premises does not need to be verbal or written. [Setting up a business](https://www.financedigest.com/7-startup-trends-that-matter-right-now.html) and opening its doors is akin to inviting customers into your premises. From a [legal point](https://www.financedigest.com/ibor-transition-the-tipping-point-for-enabling-legal-technology.html "IBOR transition: the tipping point for enabling legal technology") of view, an invitation to the premises is an express promise of safety. As a result, an invitee has significant protections under [liability insurance](https://www.financedigest.com/bionics-guide-to-product-liability-insurance.html "Bionic’s Guide to Product Liability Insurance"). ### Licensee A licensee is any [person permitted to access](https://www.financedigest.com/key-to-gdpr-compliance-controlling-access-to-personal-data.html "Key to GDPR compliance: Controlling access to personal data") the property without an invitation. Examples of licensees are utility company personnel, UPS workers and other delivery persons, [law informant officers](https://www.financedigest.com/international-law-firm-calls-in-viato-connect-uk-and-us-offices.html "INTERNATIONAL LAW FIRM CALLS IN VIATO CONNECT UK AND US OFFICES"), and any other person that enters your property as part of their job. Licensees can still expect reasonable safety on the premises they enter. But since they are not invited, their protection may be limited. ### Trespassers A trespasser is a person that is neither permitted nor invited to be at your premises. In simple words, these are [individuals that are on your property illegally](https://www.law.cornell.edu/wex/trespass). This [group of people has the least expectation](https://www.financedigest.com/food-group-danone-raises-2022-outlook-as-third-quarter-sales-beat-expectations.html "Food group Danone raises 2022 outlook as third-quarter sales beat expectations") of safety. Circumstances, where your [business could have liability for damages suffered by a trespasser are where a business owner sets a trap while knowing](https://www.financedigest.com/setting-up-a-business-in-the-uk-heres-what-you-need-to-know.html "Setting up a business in the UK? Here’s what you need to know.") it will harm the trespasser. The presence of an “attractive nuisance” like a swimming pool which could potentially attract children to your premises while you haven’t [posted signage to warn](https://www.financedigest.com/deutsche-post-raises-annual-dividend-warns-of-challenging-2023.html "Deutsche Post raises annual dividend; warns of challenging 2023") trespassers of imminent danger, can have you bearing liability for resulting damages. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---