Is General Liability Insurance All That Important for Your Business?

Insurance covers entities from financial fallout in the event of unforeseen risk or complication. Many small businesses and individuals rely on insurance covers to keep financially afloat after tragic events like fires, storms, or theft. 

One of the most common forms of insurance coverage is general liability insurance. You might wonder what this is — calm down; we’ll tell you all you need to know.

What Is General Liability Insurance?

General liability insurance protects small businesses from claims that cause bodily injury, personal injury (slander, libel), or property damage.

What Incidents Are Covered Under General Liability?

Business general liability insurance protects the business from claims that it caused bodily injuries and property damage.

What General Liability Insurance Doesn’t Cover?

General liability insurance will not fix everything that goes wrong at your business. For complete coverage, you will need more insurance policies. Here are some things that will not be covered under a general liability insurance policy.

  • Commercial auto accidents– Any accidents involving vehicles you or your employees cause while driving for work will not be covered. For this kind of accident, your commercial auto insurance cover will come in handy to cover the cost of damages. Commercial auto insurance is mandatory in most states, given the prevalence of road accidents.
  • Employee injury or illness while on the job– A lot happens in a business when an employee is injured or falls ill. An injured employee will need some form of medical attention which will not be covered by general liability insurance. Illness that occurs while on the job is also not covered under this policy. Your company will need worker’s compensation insurance to protect employees and give them benefits to aid in recovery from workplace-related injury and illness.
  • Damage to your business premises or property– For this risk, you will need to get a commercial property insurance policy that will protect your building, whether owned or rented, and other tools and equipment.
  • Claims that exceed your liability limits– Each general liability insurance policy has a liability limit. If your claims exceed the set limit, you will not get covered. Instead, your business should get commercial umbrella insurance coverage for expensive claims, which works by extending the liability limits of certain insurance covers.
  • Mistakes or errors in professional services– Patients who sue an institute for mistakes or errors in the professional services offered can be taken care of by professional liability insurance and not a general liability insurance policy.
  • Illegal acts or acts with malicious intent– If one of your employees acts intentionally to bring harm to third parties or business property, you will have to seek compensation through other means. General liability insurance can only be applied where damage or injury was caused accidentally. The insurance company usually conducts investigations to determine whether the claim is genuine.

Should a Business Choose Insurance or Not?

Businesses are susceptible to many unforeseen incidents. Some of these occurrences can take you completely out of business. So, for your peace of mind, general liability insurance is paramount.

General Liability Insurance Q&A

How much does general liability insurance cost?

The cost of general liability insurance coverage depends on a few factors:

  • The business or company size – the larger the company, the high the premiums
  • Years of experience– the less experienced, the higher the chances of risk and the higher the premiums.
  • Location– some locations are notorious for having more risk occurrence
  • Business industry type– some business industries are more risk-prone than others.

Some insurance companies will use a business’s payroll, gross sales, or building size to calculate suitable premiums.

Is cyber liability usually covered in a general liability cover?

General liability insurance covers do not usually cover cyber liability insurance. However, some insurance companies can endorse or add the policy on special request.

What is covered under general liability insurance cover?

In summary, general liability insurance covers the cost to investigate claims, defend against third-party lawsuits and pay due if you are found liable.

Does my small business need general liability insurance?

You can run your business without general liability insurance in most locations. No federal laws require small businesses and independent contractors to obtain insurance coverage, but your city or state might deem it necessary. Check your local policies to find out what you need for your business.

Suppose you are genuinely concerned that your small business needs a general liability insurance cover. In that case, getting one is safer than running your business without the necessary financial nets.

What is not covered by general liability insurance?

If the incident claimed happens or arises from activities that are excluded from the insurance contract, then general liability insurance will not apply. In addition, any occurrences outside the policy period or actions performed intentionally resulting in harm will not apply to your policy.

Also Read: 5 Myths Around a Healthy Lifestyle

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