In the course of doing business, you interact with employees, contractors, clients, vendors, and others. Any one of them could claim that your business caused them injury or loss and take legal action against you. Whether you need to defend yourself against claims of property damage, bodily injury, libel, slander, or something else, your General Liability Insurance policy would cover you.
Commercial General Liability Insurance protects small-business owners from claims of injury, property damage and negligence related to their business activities. The coverage provided by a liability insurance policy helps your business owner cover the costs associated with legal defense as well.
In addition, many businesses find that their vendors / clients require them to have General Liability Insurance (sometimes referred to Commercial General Liability, or CGL, insurance) before they’ll sign a contract. This means that having the right coverage in place can make a significant difference in a business owner’s ability to land clients and bring in revenue.
Other Business Insurance
Policies to Consider
Coverage A: Bodily Injury and Property Damage LiabilityBodily injury and property damage coverage provides protection against losses from the legal liability of insureds for bodily injury or property damage to others arising out of non-professional negligent acts or for liability arising out of their premises or business operations. Mental injuries and emotional distress can be considered bodily injuries, even in the absence of physical bodily harm.
Coverage B: Personal and Advertising Injury
Personal and advertising injury liability protects an insured against liability arising out of certain offenses, such as:
Coverage C: Medical Payments
Limited coverage for medical payments includes payments for injuries sustained by a non-employee caused by an accident that takes place on the insured’s premises or when exposed to the insured’s business operations. Medical payments coverage can be triggered without legal action. This provides for prompt settlement of smaller medical claims without litigation. It is included in the CGL policy and pays for all necessary and reasonable medical, surgical, ambulance, hospital, professional nursing and funeral expenses for a person injured or killed in an accident taking place at the insured’s premises or arising from business operations. There is no defense or legal liability coverage—as there is with bodily injury and property damage (Coverage A) and personal and advertising liability (Coverage B) —since coverage is provided on a no-fault basis.
It may be difficult to imagine how your business could cause another person serious harm or even death. But it’s good to know that if you are ever held responsible for someone else’s sickness, injury, or disease, your general liability insurance policy would pay for:
Even if you’re careful and take precautions, it’s still possible that something your business does – or something it doesn’t do – could damage another person’s property. It’s also possible that your actions might prevent the property’s owner from being able to use it. In such cases, your business liability insurance coverage compensates for:
It is important to note that property damage liability coverage often does not cover damage caused to client property you are working on or have in your possession.
Commercial general liability insurance policies generally include liability protection for services or products completed by your company. So if something your company manufactures or a service your company provides causes an injury, your policy would pay for any resulting legal expenses, as well as damages up to your policy’s limit.
Your commercial liability insurance coverage would cover liability you might take on when you enter into various contracts, such as:
If you do not manufacture, distribute, sell, serve, or furnish alcoholic beverages as a business, your general liability insurance policy will cover you if are held liable for a liquor-related accident. If you distribute alcoholic beverages occasionally, such as at a company picnic or office holiday party, you’d also be covered – as long as you don’t charge money for the alcohol.
Fire, Explosion, or Lightning Damage
The property insurance portion of your general liability insurance covers damage you may cause to other people’s property as a result of fire, lightning, or explosion, whether you own your business property or rent it. This coverage even applies to other areas in your building that may be damaged as a result of negligence on your part. Let’s say a fire in your office on the building’s second floor causes damage to another company’s offices below. Your liability policy will pay for the damage to the downstairs office space.
Hired Auto and Non-owned Auto
Most businesses add an option to their general liability policy called “hired auto and non-owned auto” insurance. If you don’t have any vehicles in your company’s name, this option meets the requirements of any contract that requires you to have commercial auto coverage.
This coverage also allows you to save money on at least part of the insurance that rental car companies recommend whenever you pick up their cars. When you rent the car in your company’s name, this insurance applies to the liability part of the rental car contract. You’ll still need to purchase damage insurance from the car rental agency if you want to be fully protected, however, as this option doesn’t cover physical damage to the rented vehicle.
Additionally, if you or an employee is driving a personally owned vehicle on company business, and you have an auto accident, non-owned auto coverage protects you should the company be sued. However, the policy will not cover a suit against you or your employee personally – that would be covered by a personal auto policy.
Legal Defense Expenses
Even if your company is not found liable for a claim, the process of mounting a defense is expensive without insurance. A business liability insurance policy will generally pay for:
If a person should be injured, either directly by you or at your place of business, your commercial liability insurance coverage would pay for funeral and medical expenses incurred within a year of the accident. For example, if one of your clients slips and falls at your office and requires medical treatment, your policy would cover the cost of that treatment. Of course, policy limits apply.
Personal injury is the part of the commercial general liability policy that protects you should someone claim that your business caused damage that isn’t physical. In the following examples, most liability policies would protect you against any lawsuits related to:
Should you ever be sued over something that happens while advertising your company’s products or services, your business liability insurance protection will cover the claim. Advertising injuries can arise from:
The cost of general liability insurance premiums are dependent on several factors.
The first factor includes the type of business. As you can imagine, companies in higher risk industries are charged higher premiums compared to lower risk businesses. For instance, construction companies are likely charged a higher premium than consulting companies.
Another factor that’s calculated into a premium rate is how many years of experience your business has. More experience may equate to lower rates. Other factors that can affect your premium rate include your business’s:
There are policy specific details that affect your rate such as coverage limits. Higher coverage limits cost more. Although, electing higher deductibles can help lower your premium cost.
Many business owners wonder why they need general liability insurance. The answer is simple. You need this insurance to help protect your business from the costs of liability claims. These claims can arise from common business situations including:
To learn more about the general liability insurance costs, get a free GL quote online. Business liability insurance is a must. The future of your business will thank you.