Every business venture has its risks, like customers getting injuries, damaging the property, or even getting sued. Without the right security, even a small problem like a slip or fall can dramatically increase the chance of financial damage your business may have to go through. This is where general liability insurance comes in handy; it covers different claims that can prove harmful to your business.
Whether you have a small contracting business or a huge company, general liability insurance is no longer an option. It prepares you for surprises, both legal and financial, and allows you to work without worrying about the security of your business. In this text, we will discuss what general liability insurance encompasses, the reasons you need it, and how it can benefit your business in the long run.
What Is General Liability Insurance?
General liability insurance is a category of business insurance that relates to the risk of a company facing a claim regarding bodily injury, damage to property, and/or personal or advertising injury. It defends against lawsuits and expenses that might have otherwise jeopardized a company’s finances. Companies and individuals, from solo freelancers to big corporations, turn to this insurance to provide them with financial security from the accidents that inevitably happen in a business setting.
This type of insurance usually pays for the legal and medical costs as well as the payment sums for third-party claims. For instance, if a customer slips and falls at your store, general liability insurance will take care of their medical expenses and all the legal expenses related to their suing you. In the same way, in case your business accidentally damages a client’s property, this policy can take care of the damages. The aim of general liability insurance is mostly to ensure that businesses do not go bankrupt because of common risks associated with running a business.
What Does General Liability Insurance Cover?
General liability insurance is helpful for several issues that are an everyday occurrence in almost every other business. One of the main areas it focuses on is bodily injury, which also protects your business in case someone gets hurt on your premises. In the case a client gets injured after tripping on a carpet in your office, this policy will cater for their and all the subsequent legal fees that may arise due to suing.
Another crucial coverage area is property damage. If, as a result of your business activities, you accidentally damage someone else’s property, your insurance will cover the repairs or even the replacement. For instance, your employee can, during a client meeting, knock a piece of expensive equipment over at the client’s office. In such a case, your policy will take care of the costs.
Personal and advertising offenses are equally as important as general liability insurance. This type of coverage encompasses claims like defamation (both slander and libel) and false advertisement. If your company is sued for copyright infringement by claiming ownership to materials owned by other businesses, your business insurance will pay for the legal expenses.
Moreover, general liability insurance pays for legal defense and settlement costs. Your insurance will pay a portion of the attorney’s fees, court filing fees, and other expenses alongside settlements or court judgments if you are sued for any of the reasons stated previously. This is very helpful for small-scale businesses that don’t have enough funds to deal with court cases privately.
Why Do You Need General Liability Insurance?
Having general liability insurance for businesses is vital since it shields them from losing money in case there are accidents, lawsuits, or damage to properties. Regardless of how much you prepare and plan, there will always be unforeseen circumstances that can cause financial strain for your businesses if they are not properly funded. Having general liability insurance helps keep your business from going under after enduring big claims.
A single lawsuit can hurt a small business. Legal charges will cost thousands, and having to pay a settlement will take a toll on the business’s resources. However, with general liability insurance, all these costs are covered, and a business firm can continue operating without a heavy financial strain. General liability insurance will also improve a firm’s credibility. A lot of clients and partners prefer working for insured companies as it assures them that they are dealing with professionals. In some fields, general liability insurance is a must. If you are looking to bid for a project, a client might ask foremost for proof of insurance.
Accidents can happen in the workplace regardless of the safety measures taken From injuries to customers, tounintentional damage of company property, there are endless chances a business faces financial risks. Instead of constantly worrying about emptying your bank account, having an insured investment ensures you’re protected.
How Much Does General Liability Insurance Cost?
Commercial General Liability (CGL) insurance costs differ from one business to another because of the size of the business, type of industry, business location, and how much risk they intend to cover. For small businesses, the average cost spent on general liability insurance policies ranges between $300 and $1000 a year. However, construction and manufacturing businesses, which are termed as high-risk industries, often incur additional costs because they are more likely to put forth claims.
The insurance offers a deal for the policy depending on business revenue, number of employees, and historical claims made. Companies perceived as having high levels of customer contact or those situated in dangerous working conditions typically pay higher premiums due to the nature of the environment.
For commercial general liability insurance, it’s best to seek coverage from different insurance companies to find the one that aligns with your coverage needs and budget. Furthermore, purchasing other business insurance policies like property insurance or workers’ compensation can obtain lower costs on general liability policies, too.
How to Choose the Right General Liability Insurance Policy?
Choosing the most suitable general liability insurance policy should begin with analyzing the particular requirements of the business. It is prudent to consider the risks that come with the specific line of work. For example, a retail store may need additional coverage for customer injuries, whereas a digital marketing agency might need coverage for advertising and related claims.
Then, establish the minimum applicable limits needed by the business. Policies normally have both per-occurrence and aggregate limits. The per-occurrence limit is defined as the sub-limit allocated for a certain claim, while the aggregate is the total sub-limit allocated for the claims within a certain period. It is advisable to select a policy with higher limits to ensure complete protection; however, policies with these limits tend to have higher premiums.
Also, check the exclusions of the policy because they can differ greatly. Some general liability insurance policies have no cover for professional errors, harm inflicted on employees, or damages done on purpose. If your business requires coverage for these types of policies, you will need to look for additional policies like professional liability insurance or workers’ compensation insurance.
Finally, collaborate with a well-established insurance provider. Obtain a business insurer that has a strong reputation among customers and possesses good financial standing. A qualified insurance agent would be able to explain the different options available and assist you in choosing the best one for your business.
Conclusion:
Purchasing general liability insurance would suit any business as it offers financial protection from incurring losses because of a lawsuit, an accident, or damages to property. Without any form of insurance, one mishap is enough to cripple your company’s finances and stability. Businesses of all sizes, whether it’s a small startup or a large corporation, can benefit from general liability insurance as it allows them to shift their focus on scaling up their operations without the stress of dealing with unforeseen risks. By selecting suitable policies and coverage limits, businesses can be protected from prospective legal and financial disputes. Take the appropriate actions now to avert accidents down the road with suitable general liability insurance.
FAQs:
1. Is general liability insurance required by law?
In most cases, the answer is no. General liability insurance does not have any legal mandates by law; however, it is strongly advised. Depending on the industry, is it possible that some clients will demand that proof of insurance be presented before working with you?
2. Does general liability insurance cover employee injuries?
No, general liability insurance doesn’t cover employee injuries. For that purpose, you need workers’ compensation insurance.
3. Can I purchase general liability insurance as a freelancer?
Indeed, freelancers do qualify for general liability insurance, particularly if they deal with clients or operate in fields with potential legal exposure.
4. What are the risks of operating a business without general liability insurance?
In the absence of general liability insurance, your company will face the financial burden of all legal and medical claim expenses, which can be financially disastrous.
5. How do I claim with my general liability insurance?
If any incident occurs, you should immediately contact your insurance company and provide all the necessary documentation required for a swift claim submission.
