General Liability Insurance is part of the general liability system of risk financing in which the buyer protects the insurer from the potential risks of lawsuits and other claims against the insurer when the buyer is damaged or injured through negligence or intentional wrongdoing by the seller, the buyer or anyone else. It is typically a prerequisite to a loan application but may be added as an addendum to certain types of property and certain types of casualty insurance. General Liability Insurance can also be included as an addendum to certain types of business insurance.
On this page, you’ll learn about the following:
General Liability Claims
Liability claims are typically based on negligence. Examples of areas in which claims may be made include:
Car accidents. Medical expenses resulting from an auto accident are covered by general liability insurance. This coverage will also pay for the medical expenses of other persons who were injured in the accident, the cost of their damages and lost wages, if applicable. It also covers the repair or replacement of vehicles and any property damaged.
Business claims. Many claims made against employers result from personal injuries that occur on the employer’s premises. Bodily injury liability coverage protects against claims made for pain and suffering, loss of wages, past and future medical costs, disability income, and pain and suffering. In certain circumstances, business liability insurance can also cover punitive damages.
Litigation expenses. General Liability Insurance will not cover your legal costs, including any out-of-pocket fees you have to pay for legal assistance. These fees are typically covered by the insurer at the time of the claim. Claims for negligence or deliberate misconduct are not typically covered. However, if you have a sufficient level of Business Risk the insurer may provide additional professional liability insurance to cover your litigants in the event that they win their case.
Workplace accidents. Workplace accidents such as slips and falls, explosions, and violence are examples of events that could be covered under a general liability insurance policy. In order to determine whether your business is at risk for these types of accidents, contact an experienced attorney who specializes in business insurance. He or she will be able to give you a more complete overview of your company’s exposure to potential claims.
Bodily Injury. Property and bodily injury claims are typical areas where a business owner may need to purchase general liability insurance. If you operate a business that accepts or is responsible for, the care and treatment of others, you may be exposed to claims related to negligence or deliberate misconduct.
Property Damage. If you or your employees suffer accidents on the property owned or leased by your business, you may be responsible for legal fees and damages resulting from these accidents. This coverage is often referred to as a property damage or liability insurance policy, and it is usually included in a general liability insurance policy.
Other Needs for Liability Insurance
There are many other potential instances where a general liability insurance policy may be beneficial to a small business owner. If you have employees, you may be responsible for their salaries and wages in the event you are sued. If you are sued for medical malpractice, you may be forced to pay the costs of a lawsuit out of your own pocket. Because these scenarios are so common, nearly all small businesses carry some form of general liability coverage, and many carry more than one type of policy to protect themselves against lawsuits.
A great way to save money on your general liability insurance premiums is to choose a company with a specialty that is not well known. For example, rather than buying commercial liability coverage from a large company that is well known, consider a specialty insurance company that specializes in motor vehicle accidents. These companies will insure your business for a fraction of the price and because they deal in a specialized area, will be well aware of any accidents that may occur on your property and will automatically provide you with a specialized attorney if such an accident occurs. This could be particularly helpful if your business is an entertainment complex and has a stage or other areas that are open to the public. Smaller, specialist companies will not be able to handle such a large risk on your behalf.
Cost of General Liability Insurance
The cost of general liability insurance can vary greatly depending on what you purchase. Some policies will cover only property damage, while others will cover your employees and even include coverage for medical bills and liability suits. There are small businesses that will only cover the basic necessities and the larger companies will have different types of insurances available. Make sure to do your homework when considering these different options and be sure to consult a lawyer before purchasing a policy or before expanding your coverage limits.
The biggest mistake that people make when purchasing general liability coverage is thinking that it will cover anything that may happen on their premises. Some policies will actually have very expensive limitations as to what is included in their policy. Other limits will only cover for injuries or property damage that happens on your property and will not cover for any medical bills or legal fees that occur as a result of accidents that take place on your premises. One of the only ways that you can determine the true cost of your policy is to consult a reputable broker that is familiar with different general liability insurance packages and the various limitations that are included in each one. By doing this, you can ensure that you get the most accurate price quote possible.