Like most homeowners, who rely on their homeowner’s insurance, to cover their liability in the event of an accident or some other unforeseen liability; many businesses rely on general liability insurance for the same type of protection.
What is General Liability Insurance?
General liability insurance, sometimes referred to as business liability insurance, is designed to help protect your business from claims of bodily injury or property damage. These kinds of claims could arise from accidents that happen during the course of normal business operations.
What Does a General Liability Policy Cover?
Depending on the nature of your business and the policy you choose, there could be additional insurance coverage you may consider, but as a general rule you should expect a business liability insurance policy to cover:
- Property damage
- Physical injury
- Defense costs
- Personal and advertising injury
For example, should you damage someone else’s property in the course of doing business, the right policy would offer coverage for that. It may also make payment resulting from an accident that happens on your premise or otherwise during business operations—regardless of fault (should a customer slip on snow or ice entering your business, for example). Additionally it could cover your business if you’re sued for libel or slander.
How Much Does General Liability Cost?
The cost of this type of business insurance will depend on the type of business you are in and a number of other factors. If you’re in a higher-risk business, like a construction company, you should expect to pay a higher premium than if you were a clothing store or a consulting company, for example.
In addition to the type of business you operate, there may be other factors that will contribute to the cost of your liability insurance. They could include:
- How many years you’ve been in business
- Where your business is located
- How big your business is
- The condition of your place of business
- Whether or not you’ve had any recent claims history
- The details of the policy (coverage limits, deductibles, etc.)
Does Your Small Business Need General Liability Insurance?
The short answer is probably yes.
According to The Hartford’s analysis of five years of small business claims from more than 1 million Hartford Business Owner’s policies, they suggest that four out of 10 small business owners are likely to face some kind of property or general liability claim in the next 10 years.
It’s not just construction companies that could require this type of insurance. There are many different types of small businesses that use general liability insurance coverage to protect their businesses.
- Small businesses generally
- Landscaping companies
- IT contractors
- Real estate agents
- Consulting companies
- Marketing companies
- Janitorial services
- Hair salons
- Retail companies
Is General Liability Insurance Required by Law?
Not in most states, but some states require general liability insurance as part of the requirement when licensing contractors or developers. For example, in California, contractors are required to carry general liability coverage. You’ll need to check your state’s licensing criteria to determine if your business is required to carry this type of insurance.
Additionally, the Small Business Administration (SBA) may require your business to have general liability coverage to get approved for an SBA loan.
Depending on the state where you do business, you may also be required to carry worker’s compensation insurance or commercial auto insurance. With this in mind, it makes sense to consult with a commercial insurance agent to make sure you are in compliance with the insurance requirements in your state.
How Does Commercial General Liability Insurance Protect My Business?
General liability insurance protects your business from 3rd party bodily injury, property damage, and personal/advertising injury claims. This insurance will cover something caused by the people who work for you, a partner, or even their spouses if they are sued for something they do as part of the job working for you.
If you are incorporated, it also covers all of the executive officers, directors, and stockholders if they are acting in an official capacity for your business. And, it will protect your employees from lawsuits that may arise out of something they might do while on the job.
Additionally, these policies typically include coverage for volunteers.
How Do I Get a General Liability Insurance Policy?
There are numerous commercial insurance companies that offer general liability insurance and it’s pretty straightforward to apply. The agent will want to know where your business is located, the industry you’re in, and other basic contact information. You can often get a quote in a matter of minutes and may even be able to conduct the entire transaction online.