General liability insurance protects your business from the costs associated with property damage, bodily injury and more. Some customers may require that you have coverage as a condition of working with them.
Without it, you’d have to pay out-of-pocket for claims and lawsuits that can ruin your reputation and bank account. Check out more at Cost-Effective Outsourcing Insurance Solutions.
Coverage for third-party claims
Commercial general liability (CGL) insurance offers a financial safety net for your business in the event that you are held liable for damages caused by your products, services, or employees. It includes premises and products liability coverage, as well as personal and advertising injury coverage. For example, if a customer slips and falls in your store, or a class action lawsuit alleges that your advertisements constituted misleading information, this policy will help pay for your legal fees.
It is recommended for any business that has a location open to the public, works closely with clients or customers, or uses client property. Landlords and mortgage companies often require proof of general liability insurance before a business can lease space. Additionally, clients may prefer to work with businesses that are insured. Many states require workers’ compensation insurance for employee injuries, and a general liability policy is an excellent complement to this type of insurance. Generally, this type of coverage also covers theft and damage to third-party property.
Coverage for property damage
The property damage liability part of general business insurance helps pay for expenses when a company accidentally damages another person’s or organization’s property. It also covers legal expenses if the business gets sued over that property damage. It’s usually included in a commercial general liability policy along with bodily injury and advertising injury coverages. Some policies include a separate umbrella insurance that increases the maximum policy limits, which is helpful for high-risk businesses.
For example, a carpet cleaner might accidentally break a customer’s living room lamp while working on their home. This kind of accident would qualify as property damage under general liability insurance, which pays for such incidents on a claims-made basis (excluding employees).
Property damage is different from personal and advertising injury, which covers offenses like slander, libel, false arrest and copyright infringement in the course of doing business. It’s important to understand the differences between these types of business insurance coverages before buying them together.
Coverage for bodily injury
Bodily injury coverage under general liability insurance helps pay for medical expenses and legal fees if someone is hurt by your business. It also helps cover the costs of damage caused to third-party property by your business. It’s common for commercial landlords, lenders and clients to require businesses carry this type of liability insurance.
General liability insurance also covers third-party property damage from non-employees’ accidents, such as a landscaper who accidentally breaks a client’s windows while working at their home. It also protects businesses from being sued for reputational harm, such as libel or slander, and for false advertising or copyright infringement.
Some types of businesses may need more coverage than the limits provided by general liability insurance alone. That’s why it’s often combined with workers’ compensation insurance and other small business policies in a commercial umbrella insurance policy. Our team can help you find the right mix of policies to meet your business needs and budget.
Coverage for advertising injury
Personal and advertising injury liability, or Coverage B, is a common component of commercial general liability insurance. It protects your business from lawsuits related to invasion of privacy, copyright infringement, stolen ideas and libel and slander. The exact details of this coverage depend on your profession and the specific policy, but it is generally a separate limit within the policy.
This coverage does not typically provide protection against claims of false arrest or malicious prosecution. It also doesn’t cover claims relating to employment practices, which are covered by workers’ compensation insurance.
Almost all businesses need general liability insurance to cover customer injuries and property damage. However, for some industries such as media and advertising agencies, professional liability insurance may be more appropriate. This covers disputes over the quality of your work and can pay legal fees, judgments and settlements. It can also pay medical expenses for those who have been injured by your actions. It does not, however, cover bodily injury or property damage resulting from your own negligence.