If you operate a business that engages the general public in any way, you need to purchase general liability insurance. The coverage protects companies and their owners from financial loss that could result from a negligent act.
Even businesses that are meticulously run with the utmost care are not immune from becoming ensnared in a lawsuit. At a minimum, general liability insurance can help pay the cost of legal defense for situations where you were not at fault. And for circumstances where you are deemed liable, your policy would pay the damages awarded to the claimant.
What Is Covered?
A general liability policy is designed to cover four common liabilities:
Bodily injury and property damage—If you are responsible for damaging some else’s property or injuring an individual due to negligence on your part, your general liability policy will respond. In addition to bodily injury, coverage also extends to mental and emotional anguish.
Personal and advertising injury—Businesses must operate in a fair and just environment. Occasionally a company may unknowingly breach the rights of another organization. This may occur through plagiarizing, libel or slander, invasion of privacy, false arrest or malicious prosecution, or using another organization’s intellectual property.
Medical expense—Bodily injury coverage kicks in when another person sues your business. However, medical expense coverage exists to pay medical expenses such as prescriptions, surgery, ambulance costs, and hospital expenses for non-employees who are injured (employees are covered under workers’ compensation insurance).
Damage to rented premises – When rented a location, coverage is provided if you are responsible for the damage you cause. Except for fire damage, coverage will only apply if you rent the location for a period of 7 days or less.
What’s Not Covered?
While a general liability insurance policy forms the foundation of a business’s insurance program, there are still many other exposures that may require the purchase of a separate policy. A general liability policy does not provide coverage for:
- Employee injuries
- Professional errors
- Automobile accidents
- Damage to your own property
- Purposeful, illegal, or malicious acts
A general liability policy protects the basic exposures almost every business faces. For most businesses, general liability insurance premiums are very reasonable, and coverage can be broadened with endorsements to protect you even more. To make sure your business is properly protected, consult with an insurance agent who specializes in your industry.