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General liability insurance protects your business against a variety of potential claims, including personal injury, property damage, copyright infringement, reputational and advertising damage.
Let’s take a look at each of these types of liability claims.
- Physical injury caused by your business is a common claim. If someone comes to your company and is injured, a general liability policy will cover their medical expenses. A personal injury claim can be something as simple as a fall from a customer in the company’s store or corporate office.
- Property damage is another common liability claim. As a business owner, you may be legally liable if any person’s property is damaged during your business. Property damage claims also include damage to a customer’s home or other property when you visit them for business. This coverage can also apply to damage to electronic data.
- copyright infringement claims arise when you are accused of using someone else’s work in your business ad or other business marketing without their consent.
- Damage to reputation can occur if you said something in a news interview about another business owner or company hurting their business.
- Advertising injury can happen when your business defames another person, business owner, or company.
These types of liability claims are common, so you want to protect your business. Paying a claim yourself can be very expensive without it General liability insurance. For example, the average cost of a slip and fall claim is $ 20,000. And if you face a reputational damage lawsuit, you’ll have to pay $ 50,000 in fees, according to The Hartford. Without general liability insurance, you would have to pay for an expensive claim or lawsuit on your own.
How much general liability insurance coverage do I need?
Most small businesses opt for standard coverage of $ 1 million per event and a total policy limit of $ 2 million for their general liability insurance, according to Insureon. This type of policy pays up to $ 1 million to cover a single general liability insurance claim with a limit of $ 2 million for the policy period. The policy period is usually one year.
Should you be faced with a claim, your general liability insurance policy can cover the cost of the claim up to your coverage limits. But you must first pay a deductible. A deductible is the amount you must pay for the claim before the insurance company starts paying. You opt for a deductible amount if you take out general liability insurance.
The cost of general liability insurance varies based on the size of the business, your industry, your location, and the amount of coverage you need.
According to Hiscox, general liability insurance typically costs $ 30 or less per month.
You can control the cost of general liability insurance by choosing the insurance limits that best suit your needs. Your insurance limit is the amount the insurance company pays for a single claim or for all claims during the insurance period. By choosing these limits wisely, you can reduce your insurance costs.
What business liability insurance does not cover
General liability insurance covers a lot for your business, but not everything.
It does not cover business-related car accidents, employee injuries and illnesses, damage to your company property, errors in professional services, claims that exceed your policy limit, or illegal acts that you or your employees have committed on purpose.
You need different types of business insurance for these types of liability claims.
For commercial car accidents, you will need commercial car insurance if you own the car and use it for business. Hired and non-owned car coverage covers you if you rent a car that you drive for work or if you use your personal car for work purposes.
You need occupational accident insurance for workers’ injuries and illnesses caused by their work. Most states require this coverage if you have at least one employee. You can get employee benefits from a private insurance company or a state-run agency.
Company property damage is covered by business property insurance. This type of policy protects rented or owned offices or buildings as well as company equipment.
Errors in professional services can be protected with professional indemnity insurance. This insurance covers legal costs if a client or client sues you for a mistake in your professional services. This insurance is also called error and absenteeism insurance.
Claims are covered up to the liability limit of your policy and no more. A good way to expand your business liability insurance is to take out an umbrella policy. This gives you protection against costly lawsuits.
Intentional, illegal acts or wrongdoing by you or your employees are not covered by general liability insurance.
The risks of not having corporate liability insurance
Facing judgments, settlements and legal fees without the help of general liability insurance can be very expensive and even bankrupt your business. Legal advice can cost more than $ 100 an hour. According to The Hartford, court costs can exceed $ 75,000 if the claim goes to court and you may have to spend several thousand dollars even if a lawsuit is dropped.
If you don’t have general liability insurance, your business is at financial risk for a number of liability claims. And you can lose customers for not doing business with you if you don’t have general liability insurance.
You need proof of insurance to prove that you are insured. An insurance certificate is an official document that lists all types of coverage and limits on an insurance policy. Once you have received proof of insurance and share it with your client, you are ready to go to work.
Who Should Buy General Liability Insurance?
Here are situations where you would benefit from corporate liability insurance:
- Your business is open to the public or customers or vendors
- You advertise or create marketing materials for your business
- You use social media personally or professionally
- You use third party locations for business activities
- You need insurance coverage to qualify for employment contracts
- You have temporary workers