With the day-to-day uncertainties of small business management, general liability insurance is something you cannot do without. Accidents happen – on site, off site, with employees and with customers – no matter how much you’ve planned.
Liability insurance can help cover medical expenses, attorney fees and damages for which you are legally responsible. It can also offer protection against situations of which you may not be aware.
For example, any individual or business providing an opinion, making recommendations, designing solutions or offering a service is at risk for a professional liability lawsuit.
What is General Liability Insurance?
Liability insurance (also known as Commercial General Business Liability) protects a company’s assets and pays for obligations – medical costs, for example –incurred if someone gets hurt on your property or when there are property damages or injuries caused by you or your employees. Liability insurance also covers the cost of your legal defense and any settlement or award should you be successfully sued. Typically these include compensatory damages, nonmonetary losses suffered by the injured party, and punitive damages.
General liability insurance can also protect you against any liability as a tenant if you cause damage to a property that you rent, such as by fire or other covered loss.
Finally, it can also cover claims of false or misleading advertising, including libel, slander, and copyright infringement.
Business liability insurance coverage is something most businesses simply must have, so it is essential that you understand what it does and doesn’t cover.
What’s Protected Under General Liability Insurance Coverage?
Here are some general liability insurance coverage rules of thumb. To be sure about your specific business needs, be sure to consult with a qualified business insurance agent.
Business is inherently risky, but business liability coverage safeguards against many known and unknown risks. Commercial liability insurance coverage protects you, your business and your employees from claims involving bodily injury or property damage, up to the limits of your policy. Policies shield you from the expense of out-of-court settlements, litigation and judgments awarded by courts.
. If damages are filed against you or you’re sued, general liability insurance covers the insurance company’s investigation and attorney expenses, any judgment or settlement, medical expenses in case of injury and bonds if they must be subsequently posted.
Claims can arise from bodily injury or property damages resulting from accidents on your premises or from your products, your operations or advertising for your business.
Liability insurance can also cover things you may not have thought about, such as advertising injury in the event your company’s marketing violates someone’s copyright. Business liability insurance coverage even offers some protection against alcohol-related accidents (as long as your company is not in an alcohol-related business, such as the manufacture or distribution of alcohol).
How General Liability Works?
General liability insurance policies always state a maximum amount that the insurer will pay during the policy period. Usually these policies also list the maximum amount the insurer will pay per occurrence.
To cover these types of situations, many companies purchase umbrella liability insurance, which picks up where their general liability coverage ends. Umbrella liability covers payments that exceed their other policy’s limits, and provides additional coverage for liabilities not covered in a standard liability insurance policy.
Most insurance companies require their policyholders to report as soon as possible any accidents that could lead to a liability claim. The insurer may then require the business owner to document the situation, forward all summonses and legal notices, and cooperate fully in any investigations.
Taking precautions before an accident can help keep your liability and insurance rates down. All businesses can take certain steps to lower the chance of a liability insurance claim:
Set a high standard for product quality control;
Make sure all company records are complete and up-to-date;
Be sure employees are properly trained;
Get safety tips for your type of business from your insurance company.