There are many unfortunate incidents that can occur during the normal operation of your business. This is where General Liability Insurance can prove beneficial, covering you and your business when claims involving bodily injuries and property damage arise. General liability insurance typically covers things like medical expenses and attorney fees related to bodily injuries for which your company may be found legally responsible. Here are five facts about general liability insurance that you should keep in mind.
1. Only Covers Damage Done to a Third Party
General liability insurance coverage is not meant to cover damage done to your employees while on the job. Instead, it only pays for damages filed by third parties, such as customers, professional service providers or your suppliers. It provides coverage for bodily injury, property damage, product liability, along with libel, slander and copyright. General liability insurance provides help to pay for medical expenses or legal expenses should your business be sued by a third-party individual. It can cover expenses to repair or replace a customer’s damaged property at a business, or harm your products cause to people.
2. Not a legal requirement, But Essential in Business Transactions
General liability insurance is not required by law for business owners. However, in many business transactions and contracts, it is a requirement by those you are looking to do business with. It is a common requirement involving high-value contracts or signing contracts with larger companies. This is often important to clients who want assurances that if any mishaps should occur in carrying out the contracted work, you are ready to take control and readily take care of damages for which you are responsible.
3. May be Required When Applying for Business Licenses
It is possible that you will need general liability insurance when applying for professional business licenses, depending on the state in which you operate your business. Particular states require general liability insurance when applying for a professional license as a mechanic, electrician or plumber. Some states are intent on ensuring that businesses can cover many common lawsuits, and that clients won’t have to worry about a lawsuit, preventing you from delivering the work that you’re contracted to do.
4. Might Be Too General in Its Coverage
A general liability policy offers limited coverage, and as such, you should consider other policies especially if you have a diverse business. Not covered by general liability insurance are professional errors or omissions, employee injuries, avoiding to damage your business property and employee discrimination lawsuits. These forms of damages could all be just as costly as a claim of physical damage, so keep a full coverage policy in mind.
5. Industry Risks Impact General Liability Insurance Costs
Industry has the biggest impact on general liability policy costs. If you’re in a high-risk industry, chances are you’ll pay higher premiums, while if you’re in a low-risk industry, you’ll see lower rates. For example, if you are a brick-and-mortar retailer with a store, you are exposed to more risks than if you were a software consultant that telecommutes.
General liability insurance as a standalone policy offers beneficial coverage that could protect you and your business. You will have the peace of mind when it comes to covering claims brought by a third party that are related to bodily injury or property damage.