Many contractors may be wondering what general liability insurance is. The main reason you should try to understand this insurance is whether you really need it. Of course, liability insurance is a central part of insurance coverage – GL is needed to compensate for losses incurred by the business due to property damage or bodily injury. Additionally known as Commercial General Liability (CGL) insurance.
CGL can be purchased alone or in combination with other important types of insurance as part of a business owner’s policy (BOP). In this article, you will learn about the types of insurance that may apply to your business. Here’s the information you need…
What does business general liability insurance (GLI) cover?
GLI coverage protects you against losses that occur in the normal course of business. Note that if you don’t protect your business with this type of insurance, you will have to pay for the damages out of your own pocket, which can be very costly for you and your business. Keep in mind that many businesses do not have sufficient funds to cover these large liabilities.
What types of damages can liability insurance cover?
- Property damage to third parties: For example, if you or your employees provide services on a client’s premises, your company may be held liable for property damage. CGL covers the cost of replacing or repairing property damaged during the course of providing services.
- Damage to reputation: If you or your employees make statements that bring your reputation into disrepute, your company could be involved in a libel or slander lawsuit. In such a case, liability insurance can help cover the legal costs and expenses associated with defending your business.
- Third-party bodily injury: If a customer slips and falls on your premises, they may sue your business. In such cases, your CGL policy includes coverage for bodily injury, which helps cover medical expenses.
- Advertising Damage: Advertising liability arises when your business is sued for copyright infringement. For example, if you use a photo in an advertisement without the permission of the photographer who took it.
Note that CGL does not cover all types of damages.
Here are some examples of what general liability insurance does not cover.
- Workers’ Compensation If a worker is injured or becomes ill on the job, the risk is covered by workers’ compensation insurance. This insurance can cover medical expenses and routine care.
- Mistakes made while providing professional services by your company. This liability is covered by professional liability insurance.
- Damage to business property – this is covered by business property insurance.
Other types of liability insurance
In addition to CGL insurance, other types of insurance can be purchased.
- Employment Relationship Liability Insurance. This insurance covers legal defense and indemnification if a former or current employee sues you for harassment, wrongful termination or employment discrimination.
- Commercial umbrella insurance complements other existing liability insurance and provides protection against large amounts of damages.
- Commercial auto insurance protects you and your employees on the road while driving a company vehicle.
- Professional liability insurance protects the directors and officers who run your business from claims related to faulty decisions or business policy.
Why purchase business liability insurance?
Liability claims and exposures are common and sometimes costly. It is estimated that four out of ten small businesses could be involved in a liability case within ten years. Emergency room visits are most frequently caused by slips and falls. Frighteningly, the average cost of this type of claim is at least $35,000.
If litigation does occur, defense and settlement costs climb to over $7,500. Therefore, without general liability insurance, businesses may be left to deal with commercial general liability claims.
GLI coverage is also necessary when establishing relationships with other businesses or operations. Some businesses may be required to provide a certificate of insurance to prove that they are insured.
Lily Poole is a Property and Home Insurance officer by profession. She is pretty well experienced in the nyc general liability insurance and accounting field and has an impressive profile in the training and development industry.