If you own a small business in the Colorado, this information will help you understand Colorado Commercial Liability insurance and protect your business and your personal assets from legal claims and settlements that can spell financial ruin. Whether you work in Denver, Colorado Springs, Fort Collins, Pueblo, Boulder, Junction, Aurora or anywhere else in the Centennial State having sufficient general liability insurance is an important part of any small business plan in Colorado.
Commercial liability insurance in Colorado will protect your business from lawsuits, should a customer or visitor experience an injury at your place of business, or have their property damaged. It also protects your Colorado business from a lawsuit associated with advertising injury or trademark infringement.
Here, you will learn the following points about Colorado business liability insurance.
The IRS determines the size of a business based on the number of employees it maintains. Here in the US, a small business is defined as any company with fewer than 500 employees.
According to the Colorado Office of Economic Development and International Trade, Colorado is currently home to more than 653,000 small businesses. These smaller companies are a huge part of Colorado’s economy, as they represent more than 99% of all employment opportunities in the state. More than 1.1 million employees in Colorado work for a small business.
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Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Colorado business from financial loss resulting from claims of injury or damage cause to others by you or your employees. A policy typically covers:
While your insurance policy will protect the business from many potential perils, some issues are specifically not covered. These include:
Commercial Liability Insurance is not compulsory for Colorado small businesses. In other words, no law requires you to carry liability coverage.
However, Colorado is a fault state. And a business owner can be sued for both economic and non-economic damages.
Examples of economic damages include:
Non-economic damages are more difficult to calculate and include issues like “pain and suffering.”
As of 2020, the cap for non-economic damages is $613,760 which may be increased to $1,227,530 by the court upon a showing of clear and convincing evidence for the increase.
Economic damages are not capped. Punitive, or exemplary, damages are not routinely awarded in Colorado, where the plaintiff must prove fraud, malice, or willful conduct to collect. The statute of limitations for any personal injury suit and products liability is 2 years. However, if injuries are sustained in a vehicle accident, the SOL is 3 years. Accidents and lawsuits (legitimate and frivolous) do happen in Colorado. If you own property or other valuable assets, you would be wise to invest in sufficient commercial general liability coverage for your Colorado business to limit your risk exposure.
Mandatory
Optional
Every small business is unique, but the type of business you operate or products you manufacture should determine how much Colorado commercial general liability insurance you need. A good starting point for most small businesses is between $500,000 and $1 million of liability coverage. However, since a court can award more than $1.2 million in non-economic damages in Colorado, it makes sense to carry as much liability as one can reasonably afford.
However, if yours is a high-risk business such as the building trades or has a high volume of interaction with the public such as a restaurant or retail business, you should consider increasing your coverage significantly.
If your small business deals with alcohol sales, gasoline, or potentially dangerous animals (like horses) you should also consider a higher limit of liability.
Note that if you operate out of your home, your Colorado homeowner’s or renter’s insurance offers very little coverage for business liability and loss.
Insurance companies employ specialists known as actuaries and underwriters who devise the premiums you will pay for your commercial liability insurance in Colorado. Particularly risky businesses, like skydiving or karate gyms, will pay more for liability coverage. If your business relies on walk-through traffic, like a hotel or restaurant, you may pay high premiums. And building contractors or construction companies may also pay high premiums, since their work has the potential to injure people or damage property.
All insurers share databases of information, which now include decades of research and claims statistics. However, the economic landscape of Colorado is evolving. If your business is in a new industry, your liability premiums may be high, until the actuaries have a better understanding of the risks and claims associated with your type of business.
Your premium for commercial liability insurance will be based on:
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Here is a list of well-known insurers that operate in Colorado: