All businesses need to protect their financial
interests—no matter how unlikely a lawsuit against them seems. General
liability insurance—also known as business liability insurance—is a form of
insurance that protects businesses and their owners from general claims such as
property damage or bodily injuries. Most businesses should take out a general
liability insurance policy to protect them financially against claims.
Let’s take a closer look at what general
liability insurance is and how it works.
General liability insurance is an insurance
policy that can help cover the more general claims that can occur against a
business. For example, if someone is injured in your store and sues your
business, a general liability insurance policy can step in to help cover any
medical expenses or attorney fees that your business may be legally responsible
for.
Why is it so important to secure a general
liability insurance policy? Liability claims happen and when they do, they can
get expensive quickly. These claims can be really hard to avoid and difficult
to predict.
For example, slipping and falling is one of
the main causes of emergency room visits. If you have an office or storefront
that customers visit, it’s easy to see how an accident like this can occur even
though the business may not be at fault. If someone slips and falls, the
average cost of that type of claim is $35,000 and costs can increase to $75,000
if you go to court. If a business doesn’t have general liability insurance,
they would need to pay these expenses out of pocket which could put a small
company out of business.
Not only is general liability insurance a
smart move, but in some cases you may need it if you want your business to
thrive. If you work with other businesses, some partners may require seeing
proof of insurance (aka a certificate of insurance) before they agree to work
with you.
Even if you are a contractor or small business
owner, you can benefit from having general liability insurance as one small
accident may be more expensive than you can afford to pay for. Contractors may
choose to only take on a general liability policy, whereas larger businesses
may want to pursue a business owner’s policy that combines general liability
insurance with a property insurance policy.
So, what type of protection does your business
get when you pay for a general liability policy?
General liability insurance helps cover costly
claims that can come up during normal business operations. If you don’t have
coverage, you would have to cover these general liability insurance costs out
of pocket and most businesses don’t have the financial resources to do that.
Typically, general liability insurance covers
business for claims regarding:
●
Third-party bodily injuries
resulting from your products, services, or operations
●
Third-party property damage
resulting from your products, services, or operations
●
Advertising injury if your business
is sue for copyright infringement
●
Reputational harm if you are sued
for libel or slander
●
Possible coverage if you are
liable for damages made to your landlord’s property
Usually, this type of insurance doesn’t cover
the cost of:
●
Employee injuries
●
Punitive damages
●
Workmanship
●
Auto accidents
●
Intentional acts
●
Mistakes
There are other types of insurance policies
and insurance riders that can cover the events that a general liability
insurance policy won’t cover. For example, a workers’ compensation insurance
policy can cover work-related injuries or illnesses experienced by employees
who need their medical expenses and ongoing care costs covered. To protect
against damage to your business property, you would need commercial property
insurance. And to help protect against claims made in your business’
professional services, professional liability insurance can provide coverage.
Making sure you cover your bases with the right types of insurance policies is
a key step to protecting your financial interests.
If you want additional protection to what a
general liability insurance policy can provide, you can consider these other
types of liability insurance policies:
●
Commercial umbrella insurance. You can place
this policy on top of an existing general liability policy to get more
reimbursement for expensive claims.
●
Employment practices liability insurance. To
help cover any legal defense costs and settlements or judgments when a former
or current employee sues your business for employment-related harassment,
discrimination or wrongful termination.
●
Management liability insurance. This type of
policy protects your business’ directors and officers from expensive claims.
●
Commercial auto insurance. If you want to
protect any employees (or yourself) who drive a car for business, you need a
commercial auto insurance policy.