{"ok":true,"canonical_url":"https://dealroom.so/glossary/liability-insurance","api_url":"https://dealroom.so/api/public/glossary/liability-insurance","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"liability-insurance","term":"Liability Insurance","group":"Reading the business","definition":"Protects the business against claims of injury or damage to third parties. It's crucial for managing operational risks and protecting your investment from lawsuits.","what_it_means":"Lenders typically require you to carry sufficient liability insurance to protect the business from unforeseen legal claims, which could otherwise jeopardize its ability to repay the 7(a) loan. Review the existing policies during due diligence.","url":"https://dealroom.so/glossary/liability-insurance","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"hazard-insurance","term":"Hazard Insurance","url":"https://dealroom.so/glossary/hazard-insurance"},{"slug":"business-interruption-insurance","term":"Business Interruption Insurance","url":"https://dealroom.so/glossary/business-interruption-insurance"},{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"compliance","term":"Compliance","url":"https://dealroom.so/glossary/compliance"}],"related_questions":[{"question":"Is a decreasing term life insurance policy acceptable for the SBA's life insurance requirement on a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/is-a-decreasing-term-life-insurance-policy-acceptable-for-the-sba-s-life-insurance-require"},{"question":"Can a borrower's existing personal life insurance policy be used to satisfy the SBA's life insurance requirement for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-borrower-s-existing-personal-life-insurance-policy-be-used-to-satisfy-the-sba-s-life"},{"question":"When is life insurance on key principals a mandatory loan condition?","url":"https://dealroom.so/for-lenders/questions/when-is-life-insurance-on-key-principals-a-mandatory-loan-condition"},{"question":"Does the SBA require life insurance on key people in the business?","url":"https://dealroom.so/sba-loans/basics/does-the-sba-require-life-insurance-on-key-people-in-the-business"},{"question":"Does an SBA 7(a) loan require specific insurance policies for my business?","url":"https://dealroom.so/sba-loans/basics/does-an-sba-7-a-loan-require-specific-insurance-policies-for-my-business"},{"question":"Can I use prepaid expenses, like insurance premiums, as part of my equity injection?","url":"https://dealroom.so/sba-7a/questions/can-i-use-prepaid-expenses-like-insurance-premiums-as-part-of-my-equity-injection"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Liability Insurance","url":"https://dealroom.so/glossary/liability-insurance","source_type":"DealRoom Data"}}