General liability insurance (GL) covers claims related to bodily injury or property damage caused by your company. GL coverage is also called commercial general liability insurance (CGL). You can get GL insurance as a standalone policy or bundle it with other essential coverages through a Business Owner's Policy (BOP) or commercial package policy (CPP).
General liability insurance offers numerous protections for your company but usually needs to be more encompassing. Discovering what general liability insurance covers and knowing you are well covered will give you confidence that you're effectively protecting your business.
What Does General Liability Insurance Cover?
General liability insurance helps with claims resulting from normal business operations. Your company may have to pay out of pocket if found liable for someone’s damages by a court if you do not have liability coverage. A commercial liability policy can help subsidize claims that your business caused:
Third-party bodily injury: If a visitor to your business had an accident at your store because of a lack of maintenance or unsafe condition and is subsequently injured, they may sue your company for damages to cover the costs of their medical expenses and economic loss. Your insurance policy includes bodily injury liability protection to handle these expenses for covered claims.
Third-party property damage: Your organization runs a higher risk of causing property damage if your business includes providing a service at a customer’s location. Property damage insurance can help to cover the costs of repairing or replacing items you accidentally damage while completing the job.
Advertising injury: Your company can face legal action for copyright infringement if you copy another business website, logo, or other content without permission.
General liability insurance does not cover every type of lawsuit. For example, it doesn't help your business with claims such as:
- Employee’s injuries. Workers' compensation insurance covers injuries or occupational diseases sustained in the workplace. It covers the costs of ongoing medical care and a portion of wages lost.
- Damage to your business property, which commercial property insurance covers.
- Various mistakes can occur in your professional services, which professional liability insurance can help cover.
Why Do You Need General Liability Insurance?
Liability claims are certainly expected and can cost a considerable amount of time, money, and energy. 4 out of 10 small businesses will likely experience a liability claim in the next ten years. Slips and falls are the most common cause of emergency room visits. The median claim expense for this type of incident is $35,000 (without legal action); if a lawsuit ensues, the average cost rises significantly to more than $75,000. Without general liability insurance, your company would have to pay for these expenses out of pocket, and you may go out of business.
You may also need general liability insurance to work alongside other companies and individuals on a job site. Some companies may ask for proof of liability insurance, also known as a certificate of insurance.
Types of Liability Insurance
Along with general liability insurance (GL), there are other types of liability insurance that most companies should consider. Those include:
Commercial Umbrella - offers a secondary layer of coverage limit above what you currently have on your underlying general, auto, and employer’s liability policies for claims that exceed those limits.
Employment Practices Liability - Covers your legal defense and settlements or judgments resulting from an employee lawsuit alleging wrongful acts. This would include being sued for sexual harassment, discrimination, failure to promote, wrongful termination, or gender bias.
Directors and Officers liability - protects a company’s directors, officers, partners, and members from third-party suits alleging that wrongful acts committed caused harm. It shields the company’s assets and the personal assets of the company’s leaders when entity coverage is included.
Business automobile - helps protect your business from the liability arising from negligent use of vehicles.
How much coverage do you need?
The amount of commercial general liability insurance coverage you need will depend on the following:
- Your risk exposures
- Contractual requirements
- Annual Revenue
Generally speaking, the greater the risk, the higher the coverage limits you will need. Specific clients or other business partners may require specific general liability limits before letting you work for them.
Your general liability policy usually maxes out at $1 million per occurrence with a $2 million annual aggregate. Any limits needed higher than this will require an Umbrella policy.
An excellent method to find out more is to consult a knowledgeable insurance professional that can provide information on liability insurance options and rates for your particular situation. Request a quote now at InsuranceAdvisor.com.