Other Than Life (OTL) Practice Exam

Which policy would you need to protect your small business from liability claims?

1. Auto Insurance

2. Commercial General Liability Insurance

3. Travel Insurance

4. Health Insurance

The correct answer is: Commercial General Liability Insurance

To protect a small business from liability claims, commercial general liability insurance is essential. This type of insurance provides coverage against a variety of claims that may arise from accidents, injuries, or negligence that occur on the business premises or as a result of business operations. It typically covers legal costs and any settlements or judgments up to the policy limit, thereby protecting the business's financial assets from potential lawsuits. This insurance is particularly vital for businesses, as it addresses risks such as customer injuries on the premises or damages caused by the business’s products or services. Without this coverage, a single claim could lead to significant financial burdens that might jeopardize the business’s viability. Other types of insurance, such as auto insurance, are specific to vehicles and would not provide protection against general liability claims. Travel insurance is designed to cover trip-related issues, while health insurance focuses on personal health expenses, neither of which would mitigate business liabilities. Thus, commercial general liability insurance is the most appropriate choice for managing liability risks within a business context.