General liability insurance is one of the most important types of insurance you can buy to protect your business. It is a broad type of coverage that provides protection against general risks. General liability coverage protects you from third-party claims made against your business, such as bodily injury and property damage. It does not cover workplace injuries sustained by your employees – those are covered under workers’ compensation insurance.
Common Uses For General Liability Insurance
Common types of claims covered under general liability insurance include the following:
- Third-party bodily injury: A person who is injured on your business property, in a slip or trip and fall accident, for example, may file a claim against your company for damages. General liability insurance can help cover the damages, as well as your legal fees to help settle or defend against this type of claim in court.
- Third-party property damage: If you or one of your employees, who is on the job at the time, accidentally damages another party’s property, you may face a property damage claim. General liability insurance can help cover the costs of settling or defending against the claim.
Less Common General Liability Insurance Uses
In addition to bodily injury and property damage claims against your company, general liability insurance can help protect you from claims made based on advertising practices. For example, a business in the same industry may file a claim against your company for advertising it believes is too similar to its own. This coverage can help pay your legal fees to settle or defend against the claim, in addition to a settlement or damages, if you are found liable.
Another less common use of general liability insurance is to protect your business against claims involving damaged reputation (libel or slander). This coverage can help pay the costs of resolving such a claim. In addition to a judgement or settlement, it can help cover expenses such as:
- Lawyers to represent your business
- Witness fees
- Evidence costs
How Important Is General Liability Insurance?
Although commercial general liability coverage is not required by law, it is an essential business expense. Most companies lack the wherewithal to survive a large claim against them. In today’s litigious society, claims against businesses are a common occurrence, and third-party liability claims are among the most common and the costliest. Furthermore, some companies may not want to work with your business unless you have adequate general liability coverage. This is because, without it, a large liability claim could put you out of business.
Some business owners believe that having an LLC can provide protection against liability claims. This is not necessarily the case if a claim is made against the business based on negligent or irresponsible acts, knowing or unknowing illegal actions, or if personal expenses were mixed with business expenses. When a complaint is filed against an LLC, owners have to respond and hire attorneys to represent them.
Accidents can happen, and even the most honest and scrupulous business owners can make mistakes. Also, your business could be sued even if it has done nothing wrong. For these reasons, it is important to carry general liability insurance to handle potential claims against your company. Our experienced agent can help get you the best quote for the coverage you need.