The Simple General Liability Insurance Guide
There are numerous disasters that can severely impact your bottom line.Your employee, for example, may spill a can of white paint on merchandise.Alternatively, a customer may be injured after tripping on a rug in your store.
Alternatively, you could be sued for reputational harm as a result of something you or your employee said.General liability insurance protects a small business from such issues (and more). It is an essential type of coverage for small business owners.
What Is the Definition of General Liability Insurance?
General liability insurance protects a company from claims of bodily harm and property damage made by customers and clients.These claims may arise as a result of your company’s products, services, or operations.
You could be sued if you don’t have general liability insurance,You could end up paying out of your company’s profits and, in the worst-case scenario, go bankrupt.
General liability insurance is also known as “commercial general liability insurance” or “business liability insurance.”
What type of insurance do I require for my small business?
General liability insurance is a critical component of any small business insurance policy, but it is only one part of the solution to the wide range of issues that could financially impact your company.You should add more coverage types to protect your business from other types of risks, such as fire, theft, vandalism, and lost income.
A business owners policy is a good place to start (BOP).It combines general liability insurance with commercial property insurance and business interruption insurance (This is also referred to as business income insurance.)
Other types of business insurance can be added to meet your company’s needs.For example, if you drive a vehicle for work, you can purchase commercial auto insurance.
What Is Covered by General Liability Insurance?
General liability insurance protects a company from a wide range of potential claims, including bodily harm, property damage, intellectual property infringement, reputational harm, and advertising injury.
- A common claim is bodily injury caused by a business.If someone is injured at your place of business, a general liability policy will cover their medical expenses.
A simple fall by a customer in a store or office could result in a bodily injury claim.
- Another common liability claim is for property damage.If a person’s property is damaged while visiting your establishment, your company may be held legally liable.
Property damage claims may also include damage to a client’s home or other property while on business.
- Copyright infringement claims arise when you are accused of using someone else’s work without their permission in your business ad or other business marketing.
- For example, if you’re being interviewed by a news outlet and say something negative about another company, your reputation may suffer.
- Advertising harm can occur if your company defames another person, business owner, or company.
These types of liability claims are common, so you’ll want to protect your company with the right insurance.A slip and fall claim, for example, costs an average of $20,000.According to The Hartford, if you are sued for reputational harm, you could face costs of $50,000.
A commercial umbrella insurance policy is an excellent way to supplement your business liability insurance.
This adds an extra layer of defense against costly lawsuits.
What Is Excluded In General Liability Insurance?
A company’s general liability insurance covers a lot of things, but it doesn’t cover everything.It does not cover business-related auto accidents, employee injuries and illnesses, property damage, professional service errors, claims that exceed your policy limit, or illegal acts committed by you or your employees.
Different types of business insurance are required for these types of liability claims, including:
- Employee Accidents And Illnesses:
Workers compensation insurance is required to cover employee injuries.
- Car Accidents:
If you own the car and are involved in an accident while doing business, a commercial auto insurance policy will financially protect you.If you use a personal car or a rented car for work, you should have hired or non-owned auto insurance.
- Professional Blunders:
An errors and omissions insurance (E&O) policy protects you if you make mistakes while working.
An E&O policy is also known as professional liability insurance.
- Theft and damage to your commercial property:
General liability insurance will not protect your company’s equipment or property from theft or damage.
To cover these types of issues, you’ll need a commercial property insurance policy.Insurance will not cover intentional acts, such as throwing a computer out the window.Furthermore, general liability insurance will not cover deliberate, illegal acts or wrongdoings committed by you or your employees.
Who Is Covered by General Liability Insurance?
Here are some scenarios in which general liability insurance or business liability insurance would be useful:
- Your company is open to the public, clients, and vendors.
- You publicize or create marketing materials for your company.
- You use social media for personal or professional reasons.
- You conduct business at third-party locations.
- To be considered for work contracts, you must have insurance coverage.
- You have temporary workers.
What are the different types of businesses that benefit from general liability insurance?
General liability insurance policy is typically purchased by the following types of businesses:
- Owners of small businesses
- Landscape design firms
- IT consultants
- Real estate brokers
- Marketing companies
- Cleaning services
- artisan builders
Is general liability insurance legally required?
Although business liability insurance is not required by law, failing to purchase coverage exposes your company to a wide range of costs that could bankrupt it.
How Much General Liability Insurance Do I Require?
According to Insureon, most small businesses choose standard coverage amounts of $1 million per occurrence and a $2 million aggregate policy limit for their general liability insurance coverage.This policy will pay up to $1 million for a single general liability insurance claim, with a total limit of $2 million for all claims during the policy period.Typically, the policy period is one year.
What Is the Cost of General Liability Insurance?
According to Insureon, general liability insurance costs an average of $42 per month.It could be less—17% of Insureon’s small business customers pay less than $25 per month for general liability insurance.
The cost of general liability insurance varies depending on the size of your company, your industry, your location, and the amount of coverage you require.You can keep general liability insurance costs under control by selecting the insurance limits that best suit your needs.
A business owners policy is a simple and affordable way to combine general liability and business property insurance.However, you can purchase general liability insurance on its own.
The cost of general liability insurance is determined by several factors, including:
- Your line of work.If your company is high-risk, the cost of general liability insurance is higher.
- Your company’s years of experience.
- Your building’s size, location, and condition.
- Details about the policy, such as deductibles and coverage limits.
- Your company’s insurance claims history.
The Dangers of Lacking General Liability Insurance
Without general liability insurance, facing judgments, legal settlements, and lawyer fees can be very costly and even bankrupt a business.Legal representation can cost more than $100 per hour.According to The Hartford, court costs may exceed $75,000 if the claim proceeds to trial, and you may be required to spend several thousand dollars even if the lawsuit is dropped.
Your company faces financial risk if it does not have general liability insurance.And if you don’t have general liability insurance, you might lose clients because they won’t do business with you.
A certificate of insurance is required to demonstrate that you have insurance coverage.An insurance policy’s official document lists all of the coverage types and limits.
How to Find The Best General Liability Insurance Coverage
Here’s a step-by-step guide to finding the best general liability insurance.
Gather your documents and information.
Before you begin looking for a general liability insurance policy, make sure you have all of the necessary information.What you’ll need is as follows:
- Basic contact details.
- Information about your company’s operations.
- The amount of employees.
- Details about your business location, such as whether you own or rent the building where your business is located.
- Documentation demonstrating how long you have owned your company.
- Revenue projections for the coming year.
Business owners policy can be considered.
A general liability insurance policy is essential for your small business, but it does not cover theft, vandalism, fire, severe weather, or lost income.You will need to purchase additional coverage if you want coverage for these types of issues.
Purchasing BOP, which combines general liability insurance with commercial property insurance and business interruption insurance, is a good way to accomplish this.Purchasing a BOP is typically less expensive than purchasing all three policies separately.
To compare general liability insurance policy quotes
You should compare business insurance quotes from several insurance companies before purchasing general liability insurance, whether as a standalone policy or as part of a BOP.This is because insurers do not price their policies uniformly.
Free business insurance quotes are available online or by contacting an independent insurance agent.