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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 damages suffered by employees in work-related injuries. The only way of protecting your business from third-party liability is by carrying premises liability coverage.

But What Is Premises Liability Insurance?

Premises liability insurance 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. If property owners 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 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 to uphold safety on your premises. After a claim is made against your insurance coverage, 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. 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 can agree to resolve the matter amicably. 

But there are situations where amicable resolution is impossible, and a client files a claim against your business. Victims will often have a personal injury lawyer working with them. 

So it makes perfect sense to have an experienced personal injury lawyer from a reputable company such as Munley Law 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 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.


An invitee is someone that has had an express invitation to your premises. An invitation to a premises does not need to be verbal or written. Setting up a business and opening its doors is akin to inviting customers into your premises. 

From a legal point of view, an invitation to the premises is an express promise of safety. As a result, an invitee has significant protections under liability insurance


A licensee is any person permitted to access the property without an invitation. Examples of licensees are utility company personnel, UPS workers and other delivery persons, law informant officers, 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. 


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. This group of people has the least expectation 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 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 trespassers of imminent danger, can have you bearing liability for resulting damages.

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