General liability coverage (protect your business from liability claims): Today, there are nearly 30 million small businesses in the U.S., and 44% of them are uninsured. Now make a random assumption: how much does an average business cost litigation? The Chamber of the United States Institute for Legal Reform reports more than $ 100 billion each year.
If your business were one of these businesses, you would like the Aladin Lamp to save you those costs. I don’t know about magic, but a general liability coverage policy can help you for sure.
What is general liability insurance?
General liability coverage is an insurance policy that protects companies against claims that may arise in the course of normal business operations. It is a type of commercial insurance policy that protects third party bodily injury, property damage, or personal injury.
General liability policy coverage
- Third-party bodily injury and property damage caused during the operation of your business.
- Damage to reputation: caused to someone due to malicious prosecution, wrongful eviction, violation of privacy, slander, defamation and more.
- Advertising damage: copyright infringement when executing commercial advertisements.
- Medical costs: incurred if a customer is injured while visiting your business.
- Damage – caused by a fire, lightning, or explosion on a rental property.
Who needs general liability insurance?
Most companies can take advantage of general liability insurance. However, this policy is mainly for companies that:
- Operate in an open and easily accessible place for the public.
- Interact with your clients in the workplace.
- Using or managing customer property.
- Conduct business in a rented space
- Frequently advertise your products and services.
- Have an internet presence
- Use social media to reach your market or serve ads
What are the most expensive claims among small businesses?
As mentioned above, almost all companies need some form of general liability insurance. However, the cost of different claims may vary. The most expensive general liability and property claims for small businesses are:
- Reputation damage: $ 50,000
- Vehicle accident – $ 45,000
- Fire damage – $ 35,000
- Product liability – $ 35,000
- Damage or harm to customer – $ 30,000
Along with this, 35% of all general liability claims result in a lawsuit. The average claim in a lawsuit can exceed $ 75,000 to defend and settle.
Lawsuits and property damage can happen at any time, and companies wouldn’t expect it. Also, it may not be possible for companies to own all the assets they use; therefore, they rent. They also need to deal with customer issues from time to time, where customers can get hurt.
Basic math is sufficient to understand that the probability of some of these incidents occurring is high. Paying out of pocket can be expensive in any of these situations. Therefore, for 100% security for your business, you must be willing to commit 10-15% of insurance costs.
General liability exclusions
General liability insurance does not cover the following:
- Professional mistakes
The insurance excludes errors and omissions such as professional errors, undelivered services and expired terms. Professional indemnity insurance (popularly known as error and omission insurance) covers these types of claims.
- Employee discrimination lawsuits
General liability insurance does not cover expenses related to claims of discrimination, harassment, and wrongful termination. For such claims, you will need liability insurance for labor practices.
3. Employee injuries.
This insurance policy does not include medical expenses for injury coverage and lost wages for employees due to accidents within the business by their staff. For this type of damage, you will need a separate workers compensation policy.
4. Vehicles used / owned / leased by a company
General liability insurance does not cover bodily or material damage caused by the use of company-used vehicles or rented or rented cars. Commercial auto insurance can cover these types of damage costs.
- Damage to commercial property
The policy also does not include the cost associated with the repair or replacement of commercial property damaged by fire or weather events or the replacement of stolen commercial property. Commercial property insurance can cover these types of damage costs.
- Damage during construction work.
The insurance coverage excludes accidents at work during the repair or maintenance of plumbing, electricity, heating and air, installation on the floor, etc. You will need a general contractor insurance policy to cover such claims.
However, you can add any of these as collaterals to general liability coverage if your business is highly susceptible to certain risks.
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General liability coverage cost
You may want to compare the prices of insurance policies and premiums with similar companies. However, premiums will differ based on your insurance needs. This difference in cost depends on multiple factors, such as:
- Business Type
- Industry and risk factors.
- Location and size of the business.
- Building condition
- Types of properties used in business
- Coverage limits
- Number of employees
- Frequency of contact with clients.
- Years of experience
- Insurance claim history
I hope this comprehensive guide to general liability coverage insurance has let you know what you need to ask your insurance agent about your commercial insurance. Insurance agents look for commercial clients because their insurance needs are often broader than clients on personal lines. Your insurance agent should be able to explain the details of your coverage and limits. An independent commercial line insurance agent will have more knowledge to help you get the best coverage possible to insure you as well as your business.