What Is General Liability Insurance?
General liability insurance is a crucial safeguard for your small business, shielding you from potential claims alleging bodily injuries or property damage caused by your operations.
General Liability (CGL) Insurance.
Without this coverage, you would be personally responsible for settling such claims. General liability insurance is known by various names, including business liability insurance, commercial general liability insurance, or comprehensive general liability (CGL) insurance.
Why is general liability insurance important?
General liability insurance is essential for protecting your business against common risks. This coverage pays for legal costs arising from incidents such as customer injuries on your premises or accidental damage to someone’s property. It also includes protection against personal and advertising injuries like libel and copyright infringement.
Small business owners often require general liability insurance to meet lease, loan, or contract obligations. For instance, landlords may request a certificate of insurance before signing a commercial lease.
This coverage is vital to small business risk management and is typically affordable. Insureon customers pay around $42 per month for this protection.
General liability insurance is indispensable for your business if:
- Operates from a public-accessible location;
- Engages closely with customers or clients;
- Manages client property;
- Leases or owns commercial real estate.
What does general liability insurance cover?
General liability insurance offers protection against typical liability claims from external parties (individuals or entities outside your business).
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This type of business insurance covers expenses related to legal defense if someone files a lawsuit for bodily injury, property damage, or advertising injury. Your policy can cover various costs, including lawyer fees, court-ordered judgments, and settlements.
In particular, your commercial general liability (CGL) policy provides coverage for:
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Third-party bodily injuries
General liability insurance can assist in covering medical expenses if a customer sustains an injury at your business premises. Additionally, it provides coverage for legal expenses in case of a lawsuit filed by a customer regarding the injury.
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Third-party property damage
A general liability insurance policy can help cover costs incurred when your business unintentionally damages or destroys someone else’s property.
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Product liability
Property damage and customer injuries aren’t limited to incidents that occur within a store. Businesses involved in manufacturing, distributing, or selling products can face lawsuits over harm caused by their products to individuals or property.
Many commercial general liability (CGL) policies incorporate product liability insurance, which assists in covering legal expenses and other financial losses arising from defective products, labeling errors that harm customers, and other product-related risks.
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Personal injuries and advertising injuries
General liability insurance can provide financial support for business owners or employees facing lawsuits for slander, libel, false arrest, or copyright infringement. This coverage helps cover legal defense costs and any settlements or judgments that may result from such claims.
How Much Does General Liability Insurance Cost?
Hartford offers general liability insurance at an average cost of $67 per month or approximately $805 per year. It’s important to note that these costs vary based on individual business characteristics, such as:
- Type of business
- Revenue
- Number of employees
- Location
- Policy details, including coverage limits and deductibles
Other significant insurance policies for small businesses that also invest in general liability insurance
General liability insurance is essential for covering common business risks but doesn’t protect against all potential liabilities. To ensure comprehensive coverage, small business owners should also consider the following policies:
- Business Owner’s Policy (BOP): A BOP combines general liability coverage and commercial property insurance at a discounted rate. It offers safeguarding against typical lawsuits and property harm.
- Workers’ Compensation Insurance: Required in most states for businesses with one or more employees, workers’ comp covers medical expenses related to work-related injuries and illnesses.
- Professional Liability Insurance: Also known as errors & omissions insurance, this policy covers professional mistakes or oversights, such as missing project deadlines.
- Commercial Auto Insurance: This insurance is mandatory in most states for businesses with owned vehicles; it covers legal expenses, medical bills, and property damage in case of accidents involving business vehicles.
- Cyber Insurance: Also called cyber liability insurance, this policy protects small businesses from the costs associated with data breaches or cyberattacks. It covers expenses like customer notifications, credit monitoring, legal fees, and fines.
Frequently Asked Questions
1- Why Is General Liability Needed?
Liability insurance is crucial for safeguarding your business against expensive claims that may arise during regular operations. These situations include:
- You or your employees representing a client
- In-person meetings with clients
- Working on or with someone else’s property
- Conducting business activities at third-party locations
- Advertising your business
Additionally, clients may require you to have this coverage before entering into a contract with your business. You can demonstrate your general liability insurance coverage with a certificate of liability insurance.
2- What Types of Events Can General Liability Insurance Help Pay For?
General liability insurance provides coverage for various scenarios, including:
- A customer or client slipping and falling in your business, necessitating medical attention
- Accidental damage caused by your employee to a customer’s property while working in their home
- Legal defense expenses arising from lawsuits against your business
- Settlements or judgments resulting from lawsuits filed by customers or clients
3- What Information Do I Need To Get a General Liability Quote?
When requesting a general liability insurance quote, ensure you have the necessary information readily available, including:
- Your business’s registered name and address
- Establishment year of your business
- Number of business locations
- Number of employees
- History of liability losses in the past three years, such as property damage, accidents, and injuries
- Desired general liability coverage limit or amount