General Liability Insurance

General Liability Insurance (GLI) is a type of insurance policy that protects businesses from financial loss due to claims related to third-party bodily injury or property damage. It covers the cost of legal fees, medical expenses, and property damage that occur during normal business operations or as a result of actions taken by employees or representatives of the company. This type of insurance is essential for all businesses, small or large, to protect against unexpected liabilities that could otherwise lead to financial ruin.

What is Covered by General Liability Insurance?

GLI covers a wide range of potential liabilities that could arise during business operations. Some of the common types of events covered by GLI include:

It is important to note that GLI does not cover every possible liability that could occur during business operations. It is always a good idea to consult with an insurance professional to determine the best coverage for your business.

Types of General Liability Insurance Policies

There are several types of GLI policies available, each with its own level of coverage and premium costs. Some of the most common types of policies include:

Occurrence-based

This type of policy covers claims that occur during the policy period, regardless of when they are reported. For example, if a customer is injured on your business property during the policy period, the policy will cover their medical expenses and legal fees even if the claim is not reported until after the policy has expired.

Claims-made

This type of policy covers claims that are reported during the policy period. If a claim is reported after the policy has expired, it will not be covered. Claims-made policies typically have lower premiums but require businesses to purchase tail coverage if they switch to a different insurance provider or cancel their policy.

Occurrence-based with Claims-made Reporting

This type of policy combines the benefits of occurrence-based and claims-made policies. It provides coverage for claims that occur during the policy period and also covers claims that are reported after the policy has expired. This type of policy is more expensive than occurrence-based or claims-made policies but provides more comprehensive coverage.

FAQs

What is the difference between GLI and Professional Liability Insurance?

GLI covers claims related to bodily injury, property damage, and personal injury that occur during business operations. Professional Liability Insurance, also known as Errors and Omissions (EoO) insurance, covers claims related to professional negligence or failure to perform professional duties. If your business provides professional services, such as legal or medical services, you may need both GLI and EoO insurance.

What is the typical cost of GLI?

The cost of GLI can vary widely depending on the type of coverage you need, the size of your business, and the level of risk involved in your business operations. Small businesses can expect to pay between $500 and $5,000 per year for GLI coverage, while larger businesses may pay upwards of $10,000 per year.

Do I need GLI if I am a sole proprietor?

While sole proprietors are not legally required to carry GLI, it is strongly recommended to protect against unexpected liabilities that could lead to financial ruin. If you work from home, you may be able to add a rider to your homeowner’s insurance policy to provide some level of coverage.

What is excluded from GLI coverage?

GLI policies typically exclude coverage for intentional acts, employee injuries, and certain types of liabilities, such as pollution or product liability. It is important to read your policy carefully to understand what is and is not covered. Consult with an insurance professional if you have questions or concerns.

How do I know if I need GLI coverage?

If you own a business, you need GLI coverage. Even if you believe your business is low-risk, unexpected liabilities can arise at any time and lead to financial ruin. Consult with an insurance professional to determine the best coverage for your business.

Conclusion

General Liability Insurance is an essential type of insurance coverage for all businesses. It protects against unexpected liabilities that could arise during normal business operations or as a result of actions taken by employees or representatives of the company. By understanding the types of coverage available and the potential liabilities that could be covered, businesses can make informed decisions when purchasing insurance coverage.