General Liability Insurance: A Complete Guide

General Liability Insurance: A Complete Guide
General Liability Insurance

General liability insurance can help in paying for medical costs and legal fees associated with bodily harm and property damage for which your business may be legally responsible. It's an essential kind of insurance for owners of small businesses. General liability insurance is a requirement for almost all businesses.

General liability insurance definition

General liability insurance is a type of liability insurance that helps in protecting your company against client and customer claims that you caused them injuries and property damage. These kinds of claims could be a result of the goods, services, or activities of your business. Without general liability insurance, you can find yourself paying out of the profits from your company and, in the worst situation, even declare bankruptcy.

The terms "commercial general liability insurance" and "business liability insurance" are also used to refer to general liability insurance.

How does general liability insurance work?

Accidents do happen, even though it's reasonable to think that you're not in the business of intentionally injuring clients or stealing their belongings. Despite your best efforts, some things simply cannot be avoided.

Unfortunately, you may still be responsible for harm and damages resulting from a sudden occurrence.

By purchasing general liability insurance, you can transfer this risk from you and your company to your insurer. Your general liability insurance policy will cover the injured party's expenses, such as repairs or medical bills, as well as your company's legal defense in the event of a claim.

In other words, general liability insurance might save you from having to close and liquidate your company.

What is covered by general liability insurance?

A company's general liability insurance protects it from a wide range of potential claims, including those for bodily harm, property damage, copyright infringement, reputational damage, and harm to its advertising.

  • Bodily injury: A common complaint is for injuries brought on by a company. A general liability insurance coverage would pay the injured person's medical expenses if they were a visitor to your place of business and were hurt. An office or retail setting customer's fall could give rise to a bodily harm claim.
  • Property damage: Another typical liability claim is property damage. If someone's property is harmed while visiting your establishment, your company can be held responsible by law. If you are traveling to a client's home or other property on business, property damage claims may include involving damage to that property.
  • Copyright infringement claims: Claims of copyright infringement arise when you are charged with using another person's creation in an advertisement or other form of commercial marketing without that person's consent.
  • Reputational harm: When you're being interviewed by a news organization and you say something negative about another corporation, it could damage your reputation.
  • Advertising injury: If your company disparages another person, business owner, or corporation, it could cause advertising injury.

What isn't covered by general liability insurance?

General liability insurance does not cover commercial auto accidents, worker sicknesses and injuries, company property damage, professional service errors, claims that exceed the policy limit or criminal activity by you or your staff.

  • Employee sickness and injuries: To cover employee injuries, you need workers compensation insurance.
  • Auto accidents: If you own the car involved in the collision, commercial auto insurance coverage will financially safeguard you. You are covered by hired or non-owned auto insurance if you use a personal vehicle or a leased vehicle for business purposes.
  • Professional mistakes: If you commit errors while working, you are protected by an errors and omissions insurance (E&O) policy. E&O insurance is often known as professional liability insurance.
  • Theft and damage to your business property: our company's property or tools are not covered by general liability insurance against theft or damage. To cover these kinds of issues, you need commercial property insurance.

Who requires general liability insurance?

Following are some situations where having business liability insurance is advantageous:

  • You welcome customers, clients, and vendors into your place of business.
  • You advertise your firm or produce marketing materials.
  • You may utilize social media for business or for personal use.
  • You conduct business at third-party locations.
  • To be taken into consideration for employment contracts, you must have insurance.
  • You employ temporary employees.

Which businesses are benefited from general liability insurance?

Businesses of the following categories frequently purchase general liability insurance:

  • Small business owners
  • Landscaping companies
  • IT contractors
  • Real estate agents
  • Consultants
  • Marketing firms
  • Janitorial services
  • Artisan contractors

How much general liability coverage do you require?

The majority of small businesses choose general liability insurance coverage limits of $1 million per event and $2 million overall. A single general liability insurance claim under this type of policy may be paid up to $1 million, with a $2 million cap on all claims made throughout the policy period. Usually, the policy's duration is one year.

How much does general liability insurance usually cost?

The average general liability insurance rate is $42 per month. The cost of general liability insurance for 17% of Insureon's small company clients may be less than that.

The price of general liability insurance coverage varies depending on your industry, region, business size, and the quantity of coverage you require.

By selecting the insurance limits that most closely match your requirements, you may control the cost of general liability insurance. Combining general liability insurance and commercial property insurance under a single policy is convenient and cost-effective. However, you can also purchase general liability insurance on your own.

The following are the key factors that determine the cost of general liability insurance:

  • Your type of business.
  • The years of experience of your business.
  • Size, location, and condition of your building.
  • Information about the policy, such as the deductibles and coverage limits.
  • The insurance claims history for your business.

Final word

Covering claims filed by the general public against your business is the primary purpose of general liability insurance. These claims may be made for physical harm, disease, or property damage brought on by the operations of your company or the sale or production of one of your products. Additionally, it might protect you in the event that you are blamed for harming your landlord's property.