2014

General Liability Insurance

What is Commercial General Liability Insurance?

General Liability Insurance is the ice cream in your business insurance sundae. It’s often the first insurance policy a business buys, and, like a real sundae, it works the best with a few toppings (i.e., other types of insurance coverage).

Nearly every business can benefit from having General Liability Insurance (sometimes called “business liability insurance.”) It’s a natural starting point when you’re looking to get insured because it’s designed to cover a number of common claims, including…

  • Lawsuits over third-party bodily injury and property damage.
  • Immediate medical expenses for third parties injured on your business premises.
  • Personal injury lawsuits (including slander and libel).
  • Advertising injury lawsuits (including copyright infringement).
  • Product liability lawsuits.

Commercial General Liability: Start Here to Insure Your Business

So how exactly does General Liability Insurance work?

First, let’s define the “third party.” Third parties are anyone besides you, your employees, and your insurance company. When a third party gets hurt or has their property damaged on your property, they may ask you to pay for damages. Whether that request takes the form of a lawsuit or the request for an ambulance from your office, your General Liability policy can help cover the cost.

Specifically, General Liability benefits can cover…

  • Attorneys’ fees.
  • Court costs.
  • Settlements.
  • Judgments, if the case goes to trial and you’re found liable.
  • Immediate medical expenses.

For concrete examples of how General Liability works, keep reading.

Coverage for Third-Party Bodily Injury and Property Damage Lawsuits

Bodily Injury

Say a client visits your office to check in on a project and trips on a power cable you have running from one room to another (why didn’t you tape it down?). He falls and breaks his leg and has to stay home from work for a week because of the injury. 

He decides to sue you, figuring that you should have provided a safer space for him on his visit. His hospital bills are expensive enough, but he also blames you for causing him to lose out on a contract and the income that would have resulted.

You contact your insurance agent and tell her about the incident. Luckily, your General Liability policy is able to cover the cost of hiring an attorney who helps you settle the case. You don’t have to sell your computer equipment to pay for the client’s bills, and can keep on doing business.

Property Damage

Now imagine this client accidentally dropping his laptop as he trips on your power cord, and the laptop shattering into a hundred pieces. He includes the cost of a new laptop in his claim. Your General Liability policy could cover this, too!

Coverage for Immediate Medical Expenses

Revisiting the above example, say you call an ambulance immediately after your client falls and breaks his leg. He’s rushed to the hospital and taken care of, and only ends up missing the rest of the workday.

Your General Liability policy can cover the ambulance ride as well as his other immediate medical costs. In fact, it ends up being a much less expensive incident because the client doesn’t end up suing you. He’s just grateful for the help you provided.

By offering coverage for immediate medical expenses, your General Liability policy allows you to take care of accidents quickly, before they turn into bigger problems. This saves you aggravation and saves your insurance provider a lot of money.

Coverage for Personal Injury and Advertising Injury

Not all damage is physical, and neither are the risks you face as a business.

For example, say a customer leaves a review on your website. It’s very positive about you, but the customer goes on to say some nasty things about one of your competitors, some of which might be a tad exaggerated. When this competitor gets wind of it, he’s furious, and demands you take down the review. You say you’ll get around to it. Then you wake up one day to find you’re being sued by the competitor for libel.

Because General Liability Insurance can cover personal injury claims, your policy helps you out with the legal costs as your attorney finalizes a settlement or crafts a defense.

The same is true for cases of advertising injury. If you’re sued for using a copyrighted image or song in your promotional material, your GL insurance may come through with legal funding. (Quick note, though: developers and designers may require Professional Liability Insurance to cover copyright infringement, because putting together materials is part of their job.)

Coverage for Product Liability

If your business manufacturers products or sells products branded with its name, you may have exposure to product liability. You can be sued if your product causes harm or property damage to a third party, but General Liability Insurance may cover these types of claims as well.

For example, say you have connections with a computer parts manufacturer and offer to sell these components as part of your business. A few clients purchase these parts from you. But then a component malfunctions and causes a customer’s network to go down. You’re sued for product liability, and your General Liability Insurance kicks in to cover your legal costs.

How Can I Benefit from Commercial General Liability Insurance?

General Liability Insurance Keeps You in Business.

Because General Liability insurance covers the most common types of claims that many businesses face, it can help you stay in business when an accident happens. It helps protect you if a customer is injured at your place of business. It can cover damage or injuries caused by your employees at a client’s site.

The average trip to the emergency room costs $1,233. In some parts of the country, ambulance rides start at $2,206. While $3,400 isn’t an obscene amount of money, it’s more than most businesses want to part with unexpectedly. When you have a General Liability policy in place, you can rest assured knowing the most you’ll ever have to pay for unexpected events is your deductible.