If you are a business owner in Maryland, you know that protecting your business from risks is very important. One of the ways to do this is by getting a general liability insurance. This type of insurance policy covers the expenses related to third-party injuries, property damages, and lawsuits arising from accidents or mistakes made by you, your employees, or your products.
In this article, we will provide you with essential information about general liability insurance in Maryland. We’ll cover what it is, how it works, who needs it, how much coverage you need, where to buy it, and more. We’ll also answer some of the frequently asked questions about general liability insurance.
Table of Contents
What is General Liability Insurance?
General liability insurance is a type of insurance policy that protects businesses from financial losses due to third-party claims of bodily injury, property damage, advertising injury, and other liabilities resulting from regular business operations. It covers the costs of legal fees, settlement amounts, and judgments awarded to plaintiffs.
In Maryland, general liability insurance is not mandatory by law, but it is highly recommended for all businesses to have it to protect themselves and their assets from unexpected claims or lawsuits.
How Does General Liability Insurance Differ from Other Types of Business Insurance?
General liability insurance is just one type of business insurance. Other types of insurance policies that businesses may need are:
- Property insurance
- Professional liability insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Product liability insurance
Each type of insurance policy covers different risks and liabilities that a business may face. While general liability insurance covers third-party claims of bodily injury and property damage, professional liability insurance, also known as errors and omissions insurance, covers claims of professional negligence or mistakes made by the business.
Who Needs General Liability Insurance?
Every business that has physical interactions with customers, clients, vendors, or the public in general, should consider getting general liability insurance. This includes but is not limited to:
- Retail stores and shops
- Restaurants and bars
- Contractors and construction companies
- Landscapers and lawn care businesses
- Consultants and freelancers
If your business provides a professional service or advice, it may also need professional liability insurance in addition to general liability insurance.
How Much General Liability Insurance Do You Need?
The amount of general liability insurance you need depends on the risks and liabilities associated with your business operations. Generally, the more risks and assets you have, the more coverage you need.
In Maryland, most small businesses opt for a minimum coverage of $1 million per occurrence, and $2 million general aggregate per year. However, some industries, such as construction, may require higher limits due to the potential for large lawsuits and claims.
What Does General Liability Insurance Cover?
General liability insurance policies typically cover the following:
- Bodily injuries to third parties on your business premises or caused by your products or services
- Property damages caused by you, your employees, or your products
- Advertising injury, such as libel, slander, or copyright infringement
- Legal defense fees and court costs
- Settlements or judgments against your business
- Medical expenses of injured third parties
It’s important to note that general liability insurance does not cover injuries or damages to your own employees, their personal property or injuries caused by intentional misconduct or criminal acts. These risks are covered by workers’ compensation insurance or other specialized insurance policies.
How Does General Liability Insurance Work?
When you purchase a general liability insurance policy, you pay a premium to the insurance company in exchange for protection against certain risks and liabilities related to your business operations. If a third party files a claim against your business, you can file a claim with your insurance company to cover the costs of legal fees, settlement amounts, or judgments against your business.
Here’s how the general liability insurance process works:
- You or your employee cause an injury or damage to a third party.
- The injured party files a claim or lawsuit against your business.
- You notify your insurance company and provide them with the details of the claim or lawsuit.
- Your insurance company investigates the claim and decides whether to approve or deny it.
- If the claim is approved, your insurance company will pay for any settlement or judgment awarded against your business, up to the limits of your policy.
It’s essential to report any accidents, incidents, or claims to your insurance company as soon as possible to avoid coverage denials or delays.
Where to Buy General Liability Insurance in Maryland?
There are several options for buying general liability insurance in Maryland. You can:
- Contact a local insurance agent or broker to get quotes from multiple insurance companies.
- Use an online insurance marketplace, such as Insureon or CoverWallet, to compare quotes from multiple insurers.
- Buy directly from an insurance company’s website, such as Geico, Allstate, or State Farm.
It’s important to compare quotes from multiple insurers and read the policy details carefully before making a purchase. Make sure you understand the coverage, limits, deductibles, exclusions, and other terms of the policy to avoid surprises or gaps in coverage.
How Much Does General Liability Insurance Cost in Maryland?
The cost of general liability insurance in Maryland varies depending on several factors, such as:
- The industry or profession of your business
- The size of your business and the number of employees
- The location of your business
- The level of risk associated with your business operations
- The coverage limits and deductibles you choose
On average, small businesses in Maryland pay around $800 per year for general liability insurance. However, your actual premium may be higher or lower than this amount, depending on your specific circumstances.
How to File a General Liability Insurance Claim in Maryland?
If you need to file a general liability insurance claim in Maryland, follow these steps:
- Contact your insurance company or agent as soon as possible to report the incident or claim.
- Provide the details of the claim, including the date, time, location, and circumstances of the incident, and the names and contact information of any witnesses or injured parties.
- Cooperate with your insurance company’s investigation by providing any requested information, documents, or evidence related to the claim.
- Keep track of all the expenses, bills, and receipts related to the claim, such as medical bills, repair costs, or legal fees.
- Wait for your insurance company to investigate the claim and make a decision on whether to approve or deny it.
- If the claim is approved, your insurance company will pay for any covered expenses up to the limits of your policy.
It’s important to report any incidents or claims as soon as possible and to cooperate with your insurance company to avoid coverage denials or delays.
Frequently Asked Questions about General Liability Insurance in Maryland
What is the difference between occurrence-based and claims-made general liability insurance?
Occurrence-based general liability insurance covers claims that occur during the policy period, regardless of when the claim is filed. Claims-made general liability insurance covers claims that are reported during the policy period, regardless of when the incident occurred. Occurrence-based policies are more expensive but provide broader coverage, while claims-made policies are cheaper but require additional coverage, such as tail coverage, to cover claims made after the policy expires.
Do I need general liability insurance if I have a home-based business?
Yes, you should consider getting general liability insurance even if you run a business from home. Homeowners’ insurance policies typically do not cover business-related liabilities, such as injuries or damages caused by your products or services, and may even exclude coverage for home-based businesses. General liability insurance can protect your business assets and personal assets from third-party claims.
What is the difference between general liability insurance and umbrella insurance?
General liability insurance covers certain risks and liabilities up to the limits of the policy. Umbrella insurance provides additional protection above and beyond the coverage limits of your primary insurance policies, such as general liability, auto liability, and employers’ liability. Umbrella insurance is typically less expensive than increasing the limits of your primary policies and can provide broader coverage.
Can I add additional insureds to my general liability insurance policy?
Yes, you can add additional insureds to your general liability insurance policy by endorsing your policy. Additional insureds are other parties, such as clients, customers, or landlords, who require proof of your insurance coverage to protect themselves from any liabilities arising from your business. Adding additional insureds to your policy may increase your premiums, but it can also help you win more contracts and build trust with your clients.
Can I cancel my general liability insurance policy?
Yes, you can cancel your general liability insurance policy at any time by notifying your insurance company or agent. However, you may have to pay a cancellation fee or receive a prorated refund of your unused premium depending on the terms of your policy.
What happens if I don’t have general liability insurance and someone sues me?
If you don’t have general liability insurance and someone sues you, you may have to pay for legal fees, settlement amounts, or judgments against your business out of your own pocket. This can be very costly and could even bankrupt your business. It’s not worth risking your business and assets for the sake of saving a few hundred dollars on insurance premiums.
Conclusion
General liability insurance is an essential protection for any business in Maryland that wants to avoid financial losses from third-party claims and lawsuits. By understanding the coverage, costs, and benefits of general liability insurance, you can make an informed decision about buying the right policy for your business.