Understanding Business General Liability Insurance

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As a business owner, it’s important to be aware of the risks your company faces on a daily basis. Injuries, property damage, and lawsuits are just a few of the issues that can arise, and they can be incredibly costly to your business. This is where general liability insurance comes in. In this article, we’ll break down what general liability insurance is, what it covers, and why it’s important for your business.

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What is General Liability Insurance?

General liability insurance, also known as commercial general liability insurance, is a type of insurance policy that provides coverage for third-party bodily injury and property damage. This type of insurance is often required by law, and it’s also a smart investment for businesses of all sizes.

What does General Liability Insurance Cover?

General liability insurance covers a wide range of issues that can arise in your business, including:

Issue
Covered?
Bodily injury
Yes
Property damage
Yes
Advertising injury
Yes
Product liability
No (requires separate policy)
Professional liability
No (requires separate policy)

Bodily injury coverage applies when someone is injured on your business premises or as a result of your business operations. Property damage coverage applies when your business causes damage to someone else’s property. Advertising injury coverage applies when your business is accused of libel, slander, or copyright infringement. It’s important to note that general liability insurance only covers third-party claims, and not claims made by your own employees.

Why is General Liability Insurance Important?

General liability insurance is important for a number of reasons:

  1. It’s often legally required: Many states require businesses to have general liability insurance in order to operate.
  2. It protects your business assets: Without insurance, a single lawsuit could bankrupt your business.
  3. It can help you win new clients: Many clients require proof of insurance before doing business with a company.

How Much Does General Liability Insurance Cost?

There is no single answer to this question, as the cost of general liability insurance can vary depending on a number of factors, including:

  • Business size
  • Industry
  • Location
  • Claims history
  • Coverage limits

In general, however, most businesses can expect to pay anywhere from a few hundred to a few thousand dollars per year for general liability insurance.

How Do I Get General Liability Insurance?

Getting general liability insurance is a relatively straightforward process. Here are the steps:

  1. Assess your business risks: Before you start shopping for insurance, it’s important to understand the risks your business faces.
  2. Compare policies: Once you know what you’re looking for, you can start shopping around for insurance policies.
  3. Get quotes: Once you’ve found a few policies that you’re interested in, you can get quotes from each provider.
  4. Choose a policy: Once you’ve reviewed the quotes, you can choose the policy that best meets your needs and budget.
  5. Purchase the policy: After you’ve chosen a policy, you can purchase it online or through an insurance agent.

FAQs

Do I Need General Liability Insurance?

There are a few factors that will determine whether or not you need general liability insurance:

  • Legal requirements: Many states require businesses to have general liability insurance in order to operate.
  • Industry standards: If most of your competitors have general liability insurance, it may be in your best interest to have it as well.
  • Risk assessment: If your business operates in a high-risk industry or has a high risk of injury or property damage, it’s a good idea to have general liability insurance.

What is the Difference Between General Liability Insurance and Professional Liability Insurance?

While general liability insurance covers bodily injury and property damage claims, professional liability insurance (also known as errors and omissions insurance) covers claims related to professional services. Examples include malpractice, negligence, and errors or omissions.

What is Product Liability Insurance?

Product liability insurance is a separate type of insurance that covers claims related to products you manufacture or sell. While general liability insurance may provide some coverage for product-related claims, it’s generally recommended that businesses have a separate product liability insurance policy to ensure adequate coverage.

What Happens if I Don’t Have General Liability Insurance, and Someone Sues My Business?

If you don’t have general liability insurance, and someone sues your business, you’ll be responsible for paying any damages awarded against you out of pocket. Depending on the severity of the claim, this could be tens or even hundreds of thousands of dollars.

Overall, general liability insurance is an essential part of protecting your business. By understanding what it covers, why it’s important, and how to get it, you can ensure that your business is properly protected from the risks it faces every day.

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