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What Does Liability Insurance Cover?
Many small business owners have a general liability insurance policy to help protect their companies. You may be asking yourself, “What does general liability cover?” This insurance helps protect your business from claims that it caused:- Bodily injury
- Property damage
- Personal injury, like libel or slander
What Types of Incidents Are Covered Under General Liability?
A general liability policy helps protect your small business from claims that it caused bodily injuries and property damage. These risks can come up during normal business operations. They can get expensive for small businesses and many don’t have the resources to cover a liability claim.
Did you know the average cost of a slip and fall claim is $20,000?1 And if you’re faced with a reputational harm lawsuit, be prepared that they can cost about $50,000.2 Without general liability insurance coverage, your business would have to pay these costs out of pocket.
What Does a General Liability Policy Cover?
A general liability policy helps cover claims that can come up during normal business operations, such as:- Bodily injuries that your business may have caused. This can include customer slip and falls. General liability coverage can help pay for their medical expenses.
- Property damage from employee accidents, like breaking a client’s windows while working at their home. This insurance can help cover the repair or replacement costs to fix the windows.
- Personal injury, like libel or slander. General liability can help pay for your business’ defense costs if it gets sued.
What Does General Liability Insurance Cover for a Small Business?
What is general liability insurance and what does it cover? General liability insurance, also known as commercial general liability insurance or business liability insurance, helps cover:- Costs for property damage claims against your business
- Medical expenses if someone gets injured at your company
- Administrative costs to handle covered claims
- Court costs, judgments and settlements for covered claims
Your general liability insurance can help pay for claims up to your coverage limits.
What Does General Liability Insurance Not Cover?
Be aware that general liability insurance doesn’t cover every kind of claim. For some, you’ll need different types of coverage to give your business more protection.
A general liability insurance policy won’t help your business with:
Commercial auto accidents that you or your employees cause while driving for work. A commercial auto insurance policy can help you cover the cost of damages. If your small business doesn’t have company-owned vehicles, hired and non-owned auto coverage could help, too. Be aware that many states require certain types and amounts of auto coverage, like bodily injury liability coverage or property damage liability coverage.
Employee injuries or illnesses due to their work. Workers’ compensation insurance gives your employees benefits to help them recover from a work-related injury or illness. For example, it can help cover an employee’s medical bills and ongoing care expenses.
Depending on your state, general liability insurance can be acquired from a:
- Private insurance company
- State-run agency
- Monopolistic state fund
Damage to your own business property. You’ll need to get a commercial property insurance policy to help protect your owned or rented building and business equipment.
Mistakes or errors in the professional services given to customers. Professional liability insurance can help cover your legal costs if a client sues you for a mistake in the services provided.
Claims that cost more than your liability limits. You’ll need a commercial umbrella insurance policy for expensive claims. This extends the limits of certain liability insurance policies.
Illegal acts or wrongdoing that you or your employees did purposefully.
The Dangers of Not Having General Liability Insurance
Judgments, settlements, legal defense fees and court costs can be extremely expensive. If someone files a claim against your business:
- You’ll need legal counsel, which can cost over $100 per hour3
- The maximum amount could easily exceed $75,000 if the claim ends up in court4
- You may need to spend several thousands of dollars, even if the lawsuit gets dropped
When you add the cost of administrative work, legal secretaries and any settlements or judgments, your business could face a bill totaling hundreds of thousands of dollars. The right general liability insurance policy can help your business cover these costs.
Who Needs General Liability Insurance?
State laws generally don’t require you to carry general liability insurance. However, not having coverage could put your business at financial risk.
Its important to understand the general liability coverage definition so that your business is protected.You may also find that businesses will want to make sure you have the minimum coverage they require before agreeing to work with you. They want to make sure your business can survive a liability claim and continue to do what they hired you to do. So, they may ask you to provide proof of insurance, also known as a certificate of liability insurance.
When Should You Consider Buying General Liability Insurance?
General liability insurance is an essential coverage for many business owners. You may want to consider getting coverage if you:
- Have a store, office or building that’s open to the public, clients or vendors
- Handle or work near client property
- Advertise or create marketing materials for your business
- Use social media personally or professionally
Get the Right Liability Coverage for Your Business
Many insurance companies offer general liability insurance, but not all of them specialize in small businesses. We have over 200 years of experience and have helped over 1 million small business owners. And we can do the same for you.
Whether you have questions about different types of insurance or need help with a claim, we’ve got your back. Our specialists are here for you and can help you get the right coverage for your business.
Get a general liability insurance quote today.
1,2,4 Based on an analysis of five years of claims data (2010-2014) from more than 1 million Business Owner’s Policies from The Hartford.
3 Lawyers.com, “How, and How Much, Do Lawyers Charge?”
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