It’s difficult to know what the right liability limit is. If you were to be sued for more than your liability insurance limit, you will need to hire a lawyer to defend you for part that isn’t covered by your insurance. So, if you are sued for more than your insurance limit, it can be very expensive just for the legal fees.
Plus, if there is a judgement against you for more than your insurance limit, then you’ll also be responsible for paying the amount your insurance doesn’t cover.
Because of this, our recommendation is to purchase the highest liability limit you can afford as the cost of the insurance is a fraction of the cost of what a lawyer charges for an hour of work.
If you are leasing or renting space for your business, you should also consider the value of the building that your unit is in. If you were responsible for damage caused to the rest of the building, for example if a fire spread from your unit to the rest of the building, you’d want a high enough liability limit to cover the cost of rebuilding the building.
