There’s no doubt that running a business is risky, and one of the biggest risks you face is the chance of being sued. Whether it’s an injury to a customer or employee, property damage, or a lawsuit alleging negligence, the potential for costly litigation is ever-present. Fortunately, there’s a solution: general liabilities insurance.
What is General Liabilities Insurance?
General liabilities insurance is a type of insurance policy that provides coverage for a wide range of common business risks, including bodily injury, property damage, and personal injury claims. It is designed to protect businesses against lawsuits and other legal claims that can arise from day-to-day operations.
With general liabilities insurance, you’ll have peace of mind knowing that you’re protected in the event of an unexpected accident or incident. If someone is injured on your business premises, for example, your insurance policy will cover the cost of medical bills and any other expenses related to the incident.
What Does General Liabilities Insurance Cover?
The exact coverage provided by a general liability insurance policy will depend on the specific terms and conditions of the policy, but some common types of coverage include:
- Bodily injury and property damage liability
- Products and completed operations liability
- Personal and advertising injury liability
- Medical payments coverage
- Fire legal liability coverage
Let’s take a closer look at each of these types of coverage.
Bodily Injury and Property Damage Liability
Bodily injury and property damage liability coverage are the most basic types of coverage included in a general liability insurance policy. This coverage will protect your business in the event that someone is injured or killed on your business premises, or if your business causes damage to someone else’s property.
For example, if a customer slips and falls in your store and injures themselves, your policy will cover the cost of their medical bills and any other expenses related to the incident. Similarly, if your business accidentally damages someone else’s property, your policy will cover the cost of repairs or replacement.
Products and Completed Operations Liability
If your business produces or sells products, you’ll need product liability insurance to protect against lawsuits related to the use of those products. If someone is injured or killed as a result of a defect or fault in your product, your policy will cover the cost of any legal fees, settlements, or judgments related to the incident.
Similarly, completed operations liability coverage will protect your business in the event that someone is injured as a result of your completed work. For example, if you’re a contractor and a customer slips on a wet floor while inspecting the completed work, your policy will cover the cost of any related expenses.
Personal and Advertising Injury Liability
Personal and advertising injury liability coverage will protect your business against lawsuits related to actions such as libel, slander, and copyright infringement. This coverage will help pay for any legal fees, settlements, or judgments related to the incident.
Medical Payments Coverage
Medical payments coverage will pay for medical expenses incurred by someone who is injured on your business premises, regardless of who was at fault. This coverage can be valuable in helping to prevent a potential lawsuit, and can also provide peace of mind to your customers.
Fire Legal Liability Coverage
Fire legal liability coverage will protect your business if you’re held responsible for a fire that damages someone else’s property. This coverage will help pay for legal fees, settlements, or judgments related to the incident, as well as any damage caused by the fire.
Why Do I Need General Liabilities Insurance?
General liabilities insurance is not only a good idea, it’s often required by law. Many states require businesses to carry liability insurance, and some industries have specific requirements as well (for example, doctors and other medical professionals are often required to carry malpractice insurance).
Even if liability insurance is not required in your state or industry, it’s still a good idea to have it. Without liability insurance, your business could be at risk of bankruptcy or closure in the event of a costly lawsuit or legal claim.
Additionally, many customers and clients will expect you to have liability insurance as part of your business operations. Having liability insurance in place can help assure your customers that you’re a responsible and professional business owner.
How Much Does General Liabilities Insurance Cost?
The cost of general liabilities insurance will vary depending on a variety of factors, including the size of your business, the type of industry you’re in, and the amount of coverage you need. Generally, the more risk your business faces, the more expensive your insurance premiums will be.
It’s important to shop around and compare quotes from different insurers to find the best coverage at the best price. Keep in mind that the cheapest policy may not always be the best option – it’s important to make sure you’re getting the coverage you need to protect your business.
FAQ
What’s the difference between general liability insurance and professional liability insurance?
While general liability insurance covers a wide range of common business risks, professional liability insurance is specifically designed to protect businesses from claims related to professional services, such as errors and omissions, malpractice, or negligence. Depending on the nature of your business, you may need one or both types of insurance coverage.
What are some common exclusions in general liability insurance policies?
While general liability insurance policies do provide broad coverage, there are some common exclusions that you should be aware of. These may include:
- Claims related to intentional acts
- Claims related to pollution or environmental damage
- Claims related to sexual harassment or discrimination
- Claims related to data breaches or cyber attacks
Additionally, some policies may have specific exclusions or limitations depending on the nature of your business. It’s important to carefully review your policy to understand what is and is not covered.
What’s the difference between an occurrence policy and a claims-made policy?
An occurrence policy provides coverage for incidents that occur during the policy period, regardless of when the claim is filed. A claims-made policy, on the other hand, provides coverage only for claims that are made while the policy is in effect. Claims-made policies typically have a retroactive date (usually the date the policy was first purchased), and may require the purchase of tail coverage to provide protection for claims made after the policy has expired.
Do I need general liability insurance if I work from home?
Even if you work from home, you may still need general liability insurance if you’re running a business. If clients or customers visit your home office, for example, you could be liable for any injuries or property damage that occur on your property. Additionally, if you provide professional services (such as consulting or accounting), you may need professional liability insurance to protect against claims of negligence or errors and omissions.
Can I get general liability insurance without a business license?
While some insurers may require proof of a business license before issuing a policy, it is possible to get general liability insurance without a license. However, keep in mind that operating a business without a license could put you at risk of fines or other penalties.
The Bottom Line
General liabilities insurance is a crucial part of protecting your business from unexpected risks and lawsuits. By understanding the coverage options available and shopping around for the best policy, you can ensure that your business is adequately protected and prepared for whatever challenges may come your way.