What You Need to Know About General Liability Insurance

Do you run a small business? If so, you know that every day, your company is at risk for potential lawsuits. That’s why is so critical that you have a general liability insurance policy.

Just about any type of business needs general liability insurance for covering medical costs and attorney’s fees resulting from property damage and bodily injuries. Here’s what you need to know about general liability insurance, including a few considerations and warnings.

General Liability Insurance and What It Covers

Maybe you’re not sure what’s meant by “general liability insurance.” This type of insurance—which is also known as business liability insurance or comprehensive commercial liability (CCL)—offers coverage for liability claims regarding bodily injury and other types of physical injuries or property damage that occur at your place of business.

This insurance policy goes into effect when a non-employee, or someone who doesn’t work for you, sues you. General liability insurance gives you protection from many of the common issues that can confront a small business, such as:

• Costs linked with third-party bodily accidents and/or injuries to non-employees occurring at your business site, such as someone suing you because of a fall on your property, which led in a broken limb.
• Damages to someone’s property. For example, you could be sued by your landlord because of a fire in your office that destroyed a portion of the building.
• Lawsuits triggered from a business’s reputation being damaged. Let’s say you posted negative remarks about a competitor on social media. As a result, you could be sued for hurting their reputation. When you have general liability insurance, your insurance company can help in covering legal expenses, which include attorney’s fees and the cost of settlements.
• Advertising mistakes or copyright infringement is also covered under general liability insurance. A common example is a competitor suing you because they think you copied their marketing or advertising materials.

Just as its name implies, general liability insurance policies are…well, general. This means they usually don’t involve specific types of risks that a small business can face—those may require their own separate policies.

Factors Determining the Amount of Coverage

The three main factors that determine how much coverage your business might need include:

• The type of products your business manufactures. Of course, you’ll need more liability limits if your business produces dangerous products.
• Perceived risk. When deciding on the amount of coverage you’ll need, think about how much risk is involved with operating your business. If you have a business that creates artwork or toys, you’ll need less coverage than, say, if your business produced heavy machinery.
• The location of your business. If your business operates in a state known for rewarding higher damages, it’s a good idea to invest in higher liability limits.

Considerations and Warnings

• General liability insurance covers your business for accidents that occur either at your business site or at your client’s place of business.
• Coverage is included for legal teams representing your business, witness fees, and evidence costs, in addition to settlement or judgment fees for damages that you’re legally responsible for paying. It provides coverage for expenses involved in defending settlement fees, regardless of whether or not they’re fraudulent.
• Because general liability insurance only gives you protection against certain kinds of claims, to fully insure your business, you also need to look into professional liability insurance, which is also referred to as errors and omission insurance.
• It’s important to periodically review your general liability insurance policy at least every six months to see if you need to make upgrades or additions. Consider how your business can change, which means your insurance needs will probably need to change.

For all your business insurance needs, let our experts help. We work with a wide range of small businesses like yours to make sure they’re not only protected, but that they have the right information and education to succeed. Please contact us to learn more.