What is general liability insurance?
What kinds of claims does general liability insurance cover?
Do I need general liability coverage?
How much does general liability insurance cost?
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What is General Liability Insurance?
I run a business and I’ve begun thinking about insurance. The most common term I’ve come across is general liability insurance, but I’ve also seen the term business liability insurance and even commercial general liability insurance. Are all of these terms the same?
Whether it’s called general liability, commercial general liability, or business liability insurance, it’s all the same thing. You can think of it as the most basic kind of coverage for your business. It protects against the claims that arise from normal business operations, which we’ll discuss in greater detail below.
The key point to remember is that when you see coverage referred to as “_________ liability” coverage, it’s talking about general liability insurance for business.
What Kinds of Claims Does General Liability Insurance Cover?
OK, now that I understand that all general liability is created equal, can you explain what it covers?
As I briefly mentioned above, general liability is designed to protect against claims that arise during normal business operations. Let’s take that one step further. Insurance companies consider the following claims to be “normal” business-related claims:
- Property damage: This is property damage to your property or to a third party’s property that is in your care or control. Keep in mind that property covers your building (whether you rent or own the space) and the property inside (i.e., the stuff you can move).
- Physical injuries: If a third party is injured while on your property or using a product that you manufactured or sold, general liability will cover medical costs for that injury.
- Legal costs: If you’re sued, general liability will pay for the costs of defending the business in that lawsuit.
- Personal and advertising injuries: These are generally privacy-related injuries, like libel, slander, or even false advertising. This is one point where a lot of policies differ on what’s covered, so be sure to check yours.
I want to emphasize that not all policies are created equal. The scope of your coverage could be dramatically different from the next company’s policy. That being said, it’s important that you discuss your business and unique circumstances with your TrustedChoice.com independent agent. It’s the best way to ensure that you’re covered for any potential loss or injury that comes your way.
Do I Need General Liability Coverage?
Are all businesses required to purchase general liability insurance, or is this something that’s optional?
A general rule of thumb is that you’re going to want to purchase general liability insurance. You want to make sure you’re covered so that if something happens, you don't go bankrupt because you didn’t want to pay the annual premium.
That being said, any and all business owners – no matter how big or small your business might be – should discuss general liability coverage with an independent agent. This is the best way to get a range of coverage options and to discuss where you need coverage and where you’re maybe safe to forgo coverage. After all, even if you’re a one-person show, you might need coverage.
How Much Does General Liability Insurance Cost?
Cost is the most difficult question to answer with insurance, because the answer is always the same: It depends. It depends on a number of factors, including:
- Risk: The riskier your business, the higher your premium. Think of this as running a home baking shop vs. a rodeo. There are infinitely more ways for people to get hurt and things to go wrong at a rodeo than there would be if you’re baking cakes out of your kitchen.
- Potential Liabilities: Liabilities go hand-in-hand with risk. The more people you come into contact with and the more people you employ, the higher the liabilities and the higher your premium will be.
- Scope: Do you run a small or large business? How many services do you offer? How does this affect what could go wrong? These are all questions that will play into the cost of your general liability policy.
There are other factors that your TrustedChoice.com independent agent will discuss with you once they know a bit more about your business. Remember: The greater the risk and liabilities, the larger the scope, and the more stuff you own and people you could hurt, the higher your premium.
TrustedChoice.com Article | Reviewed by Paul Martin
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