Numerous disasters have the potential to severely impair your finances. For example, your staff member may drop a paint can on goods. If a customer trips over a rug in your store, they could get hurt. Alternatively, you can be sued for damaging another company’s reputation because of something you or a worker said.
A small business is protected against these kinds of issues (among others) by general liability insurance. It is a crucial kind of insurance for proprietors of small businesses.
What Is General Liability Insurance?
One kind of small business insurance that protects your company against unintentional injuries and property damage to third parties is general liability insurance. It also addresses other issues like damage to one’s reputation, copyright infringement, and advertising injury.
These kinds of claims could be brought about by the goods, services, or business practices of your company. If you don’t have general liability insurance, you might have to pay for it out of your company’s profits or, in the worst case, even declare bankruptcy.
“Business liability insurance” or “commercial general liability insurance” are other terms used to refer to general liability insurance.
What Does General Liability Insurance Cover?
A business is protected by general liability insurance against a range of potential claims, such as property damage, bodily injury, copyright infringement, harm to one’s reputation, and injury from advertising.
- Claims for bodily harm brought on by businesses are frequent. For example, a general liability policy would pay for someone’s medical expenses if they were hurt while visiting your place of business. Anything as basic as a customer falling in a store or office could result in a bodily injury claim.
- Another typical liability claim is for property damage. Legal repercussions could apply to your company if someone’s property is damaged. In the event that you are visiting a client for business, property damage claims may cover harm to their home or other assets.
- If you are accused of using someone else’s work in your business advertisement or other business marketing without that person’s consent, you may be subject to copyright infringement claims.
- Reputational damage can occur, for instance, if you say something unfavorable about another company during an interview for a news outlet and it negatively impacts their business.
- If your company disparages another individual, business owner, or organization, it may result in advertising injury.
Due to the frequency of these liability claims, you should maintain adequate insurance to safeguard your company. For instance, a slip and fall claim typically costs $20,000. Additionally, The Hartford states that you may have to pay $50,000 in legal fees if you are sued for reputational harm.
Getting commercial umbrella insurance is a smart way to prolong your business liability coverage. This provides an additional degree of defense against costly lawsuits.
Who Needs General Liability Insurance?
The following scenarios warrant the purchase of business liability insurance for your company:
- Customers, vendors, and the general public can all visit your business.
- You produce marketing collateral or run advertisements for your company.
- Either personally or professionally, you use social media.
- You conduct business at locations owned by third parties.
- To be eligible for work contracts, you must have insurance.
- You employ temporary workers.
What Types of Businesses Benefit from General Liability Insurance?
The following categories of companies usually purchase general liability insurance:
- Contractors with artisanal skills
- Advisors
- contractors for IT
- Cleaning services
- Companies that do landscaping
- marketing companies
- Agents of real estate
- proprietors of small businesses
How Much Does General Liability Insurance Cost?
According to Insureon, the average monthly cost of general liability insurance is $42. It may be less than that; 29% of small business clients of Insureon pay less than $30 a month for general liability insurance.
The price of general liability insurance coverage varies according to your location, industry, size of business, and required level of coverage.
By selecting the insurance limits that most closely match your requirements, you can control the cost of general liability insurance. Combining business property insurance and general liability insurance into one handy and affordable package is a business owners policy. However, general liability insurance can also be purchased separately.
The cost of general liability insurance is determined by several important factors, including:
- the kind of business you run. The cost of general liability insurance is higher if your business is considered high-risk.
- How long your company has been in business?
- The dimensions, position, and state of your structure
- Specifics of the policy, like deductibles and coverage limitations
- The history of insurance claims for your company
General Liability Insurance Policy Limits
When purchasing general liability insurance, it’s critical to understand the two different kinds of limits.
- The maximum amount that your insurance provider will pay out for a single claim is known as the “per-occurrence limit.” Your insurance will pay up to $1 million per incident if your per occurrence limit is that amount.
- The total amount your insurance provider will pay out for all of the claims you make during the duration of your policy is known as the aggregate limit. Regardless of the quantity of claims made against you, your insurance company will not pay you more than $2 million if that is your aggregate limit. Since the majority of general liability insurance policies have a one-year term, the aggregate limit would be in effect during that time.