Last Updated: February 16, 2024, 11:45 am by TRUiC Team


Does Business Insurance Cover Legal Fees?

We’ll share which business insurance policies cover legal fees and how they can help protect your business.

Recommended: Next Insurance is dedicated to matching small businesses with the right policies at the best price.

A stack of paper money and a gavel.

Business Insurance Policies that Cover Legal Fees

Though the most common business insurance policy is general liability insurance, there are other insurance policies that may cover legal fees in the event your business is sued.

Here are the business insurance policies that may cover legal fees if your business is sued.

General Liability Insurance

General liability insurance is the most common type of business insurance that covers legal fees for civil lawsuits. 

This type of insurance provides coverage for a wide range of risks, including bodily injury, property damage, and advertising injury. 

If your business is sued for any of these reasons, your general liability insurance may cover the cost of your legal defense and any damages that you are ordered to pay.

For example, let's say that a customer slips and falls in your store and sues your business for their injuries. 

Your general liability insurance may cover the cost of your legal defense and any damages that you are ordered to pay. 

Similarly, if someone claims that your advertising misled them and they suffered financial losses as a result, your general liability insurance may also cover the cost of your legal defense and any damages that you are ordered to pay.

It's important to note that not all general liability insurance policies are created equal. 

Some policies may have exclusions or limitations that could impact your coverage in the event of a lawsuit. 

It's important to review your policy carefully and talk to your insurance agent if you have any questions or concerns.

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, provides coverage for claims of professional negligence. 

If your business provides a service or advice to clients, this type of insurance is particularly important. 

For example, if you are a consultant and a client claims that your advice led to financial losses, your professional liability insurance may cover the cost of your legal defense and any damages that you are ordered to pay.

How to Start an LLC Tip Icon

Stay within your budget. Explore our Affordable Insurance Review to find the right match.

Directors and Officers Liability Insurance (D&O)

Directors and officers liability insurance, commonly known as D&O insurance, provides coverage for claims against your business's directors and officers for their actions. 

This type of insurance is particularly important for businesses that have a board of directors or other high-level executives. 

If a decision made by one of your directors or officers results in financial losses for the company, D&O insurance may cover the cost of your legal defense and any damages that you are ordered to pay.

Cyber Liability Insurance

Cyber liability insurance provides coverage for data breaches and other cyber attacks. 

If your business stores sensitive information such as customer data or financial information, this type of insurance is particularly important. 

If your business experiences a data breach or other cyber attack, cyber liability insurance may cover the cost of your legal defense and any damages that you are ordered to pay.

FAQs

It depends on the type of insurance policy you have. General liability insurance, professional liability insurance, directors and officers liability insurance, and cyber liability insurance are some examples of business insurance policies that can cover legal fees.

Business insurance is a category of insurance that shields companies from financial losses caused by unexpected occurrences. The specific types of coverage required are determined by the nature of the business. 

Some forms of business insurance include general liability insurance, professional liability insurance, property insurance, workers' compensation insurance, and cyber liability insurance.

Yes, general liability insurance can cover legal fees related to civil lawsuits related to bodily injury, property damage, and advertising injury. We recommend that you review your policy and talk to your insurance agent if you have any questions or concerns about coverage.