What Is Premises Liability Insurance and Do You Need It?

As a home or business owner, you undoubtedly know that there are many issues you need to consider—and insurance is a very important one. As the owner of property, you can be legally responsible for the safety of the people on your property—and that is where premises liability insurance can help.

Premises liability insurance covers you in case of an accident in your home or business. If someone slips and falls on your property—for example, your business—and sustains injuries, they could theoretically sue you for a wide range of issues, including lost wages, medical bills, future medical costs, physical therapy, prescription costs, pain and suffering, mental anguish, permanent disability, and loss of enjoyment of life. This can put you on the hook for a very large amount of money, potentially ruining your finances and your business itself. Premises liability insurance can help protect you and your livelihood.

Whether or not someone has a legitimate premises liability claim against you depends on a few key factors, including the legal status of the visitor. The law divides visitors to your property into three categories: licensee, business invitee and trespasser. A licensee is a person who is on your property because you have expressly or implicitly allowed them to enter, despite the fact that your property is not open to the general public. This category includes social guests and solicitors. A business invitee enters your property under your own inducement, usually for a commercial or business purpose, and a trespasser, as you may have guessed, is a person that enters your property without your permission (either express or implied) for their own reasons, and not for your benefit.

A premises liability case also depends upon if, according to NOLO:

1. The owner or occupier of the premises knew or should have known of a dangerous condition on his property; AND

2. The owner or occupier was negligent in failing to remove the condition; AND

3. That negligence probably caused the injured person’s injuries or damages.

In essence, while your state may not require you to purchase premises liability insurance, you would be protected in many instances. A savvy business owner would be wise to talk to an insurance expert about the kind of coverage a premises liability policy would provide.