What Is General Liability Insurance?
When it comes to our cars, homes, and lifestyles, we know the importance of personal liability insurance. Liability insurance protects you from great financial loss if someone were to sue you for causing property damage or bodily injury.
But what about your business? General or commercial general liability insurance covers your business against the same thing—loss or damage that your business is deemed liable for.
What Does General Liability Protect?
This insurance covers claims made by members of the public that happen in connection with your business. It protects your business against the cost of legal fees, including court costs and the resulting award, if any. Court cases can often grind on for an extended period of time, and the peace of mind gained by relinquishing the worry regarding attorney costs is important.
Here are some specific instances in which a general liability insurance policy can help:
- Third-party bodily injury: If someone were to become injured while on your business’ property, this coverage pays for lawsuits and medical bills for the third party. Picture someone delivering an order, slipping on the stairs and breaking their leg—although there was no intention for this to occur, the costs that arise from the accident can be substantial.
- Third-party property damage: If you or someone that represents your business is liable for damages to someone else’s property, like a nearby business’ window or leased equipment, the policy will help cover lawsuit and replacement costs. It may also cover you if you are held liable for damages to your landlord’s property if your business leases the space.
Is There Anything It Doesn’t Cover?
While commercial general liability insurance covers a lot, it doesn’t typically cover loss or damage arising from your employees or within your business. Examples of this are:
- Injuries to your employees: Someone your business employs is injured on-site or while operating on behalf of your business.
- Commercial auto accidents: If you or an employee operates a vehicle on behalf of your business and gets into an accident, a commercial automobile or fleet policy will help.
- Worker’s compensation: This exclusion in a commercial general liability policy eliminates coverage for statutory benefits your business may owe due to a claim by an employee.
Do You Really Need General Liability Insurance?
General or commercial general liability insurance is one of the most important coverages you can purchase for your business. While it’s not required by law, in many circumstances, a business cannot operate without it—this is because many don’t have the funds to survive when faced with a large liability claim.
A general liability insurance policy also provides your business with credibility. Showing proof of a liability insurance policy lets other businesses know you’ll be able to function and operate should someone make a liability claim against your own.