If your business were to be sued, would it be able to continue operating? This is a scenario that keeps many business owners up at night, but with a carefully chosen general liability insurance policy, it is a risk that can largely be mitigated.
General liability insurance offers businesses a protection against claims of property damage or bodily injury lodged against them. These claims may stem from the company’s operations, services or products. This coverage can help protect the income of the business in the event of a lawsuit, and may even help avoid bankruptcy.
What is Covered by a General Liability Insurance Policy?
There are a variety of potential claims that general liability can protect against. Here is a closer look at some of the main categories for which it offers protection.
- Property damage – Third-party property damage is one of the most common liability claims. If an individual’s property is damaged while they are at your place of business, or you or your employees damage their home or other property during a business-related visit, your business could be held legally responsible. When these situations arise, a general liability insurance policy can cover the repair or replacement of the damaged property.
- Bodily injury – Another common liability claim is third-party bodily injury. This applies when an individual is injured at your place of business, such as a customer slipping and falling at your office building or store. In these incidents, a general liability policy can cover the affected party’s medical costs.
- Advertising injury – Advertising injury claims may occur if another individual or business believes that your business has infringed on a copyright that belongs to them. For example, a photographer may file a lawsuit if they believe your company has used one of their photographs in advertisements without securing permission beforehand. In such cases, general liability insurance could help cover the legal costs of defending the business.
- Reputational harm – A business may be sued for slander or libel because of something that the company or one of its employees said about another party. For example, if you are interviewed by the media and say something about a competitor that ultimately hurts their business, you could be sued. In these cases, a general liability policy can cover the legal costs involved in your defense.
What is Not Covered by General Liability Insurance?
Although general liability insurance is a good all-around policy, it is important to note that it does not cover every scenario. For example, it does not cover damage to the property of your business, mistakes you make in your professional services, or employee injuries. However, there are other types of business insurance that can address these types of claims.
Here is a brief look at other types of liability that do not fall under general liability insurance and may require a different type of policy to cover.
- Professional mistakes – Errors and omissions insurance can offer coverage in the event that a mistake is made by you or an employee while carrying out your work. Also known as professional liability insurance, it is useful for professionals such as accountants, consultants, real estate agents and advertising agents.
- Vehicle accidents – Vehicle accidents do not fall under the coverage of a general liability insurance policy. Instead, a commercial auto insurance policy is needed to offer protection.
- Product liability – Small businesses that create, manufacture, distribute or sell products need to know that product liability does not fall under the coverage provided by a general liability policy. Instead, your business will need a dedicated product liability policy to get coverage for bodily injuries and property damage stemming from claims related to manufacturing, marketing or design defects.
Keep in mind that general liability insurance does not provide coverage in any case in which there are illegal or deliberate acts or wrongdoings on the part of you or your employees.
What Types of Businesses Need General Liability Insurance?
All businesses can benefit from the coverage provided by general liability insurance. It is particularly useful for businesses that are open to the public and regularly receive visits from clients or vendors. Companies that use third-party locations for their business activities, as well as those who advertise or use social media professionally or personally, can also benefit from general liability insurance.
Some of the specific types of businesses that need a general liability policy include small retailers, IT contractors, marketing firms, artisan contractors, consultants, landscaping companies and real estate agents.
Discuss your Business Insurance Needs with the Professionals at Business Benefits Group (BBG)
Help your business remain profitable and minimize risk by securing the right insurance to cover potential claims with help from the business insurance division of Business Benefits Group (BBG). To find out more about how our tailored insurance services can help your business, contact us today or fill out our online contact form.