What Does General Liability Insurance Covers For Small Businesses?

There are numerous disasters that can wreak havoc on your finances. A bucket of white paint, for example, could be spilled over items by one of your employees. Alternatively, a consumer may be injured after stepping on a rug at your store. You could also face a lawsuit for reputational damage as a result of something you or an employee said. General liability insurance covers small businesses from problems like these and more. It’s an important type of best small business insurance.

What Is General Liability Insurance?

General liability insurance covers a company from claims of personal harm and property damage brought by customers and clients. These claims may arise as a result of your company’s products, services, or operations. If you don’t have general liability insurance for your business, you risk losing your income and, in the worst-case scenario, going bankrupt.

General liability insurance is also known as “commercial general liability insurance” or “business liability insurance.”

What Does General Liability Insurance Cover For Small Businesses?

General liability insurance covers a business against a wide range of claims, including bodily injury, copyright infringement, property damage, advertising injury, reputational harm, etc.

  • Bodily injury sustained when you are on a company’s premises is a common claim. General liability coverage would cover medical expenses if someone was hurt while visiting your place of business. A simple customer fall in an office could result in a bodily injury claim.
  • A frequent liability claim involves property damage. If someone’s property is destroyed while they are at your business, you could be held legally liable. If you are visiting a client for business, property damage claims may involve damage to their home or other property.
  • Copyright infringement claims arise when you are accused of exploiting someone else’s work without their consent in a company ad or other form of marketing.
  • Reputational harm can be in the form of saying something negative about another company in a press interview, which could impact their business.
  • Advertising injury includes defamation of another person or business.
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Liability claims like these are common, so you’ll want to make sure your company is covered with the right insurance policy. A slip and fall claim, for example, can cost up to $20,000. According to The Hartford, if you are sued for reputational harm, you might be facing costs of $50,000.

Commercial umbrella insurance coverage is a fantastic way to expand your business liability insurance. This adds another layer of defense against costly legal action.

What Business Liability Insurance Doesn’t Cover

Getting general liability insurance coverage is very important. It covers a lot for a business, but not everything. It doesn’t cover auto accidents related to your business, staff illnesses and injuries, property damage, professional service errors, claims that exceed your policy limit, or unlawful conduct committed by you or your workers.

You’ll need several types of business insurance to cover these types of liability claims, such as:

  • Employee injuries and illnesses: Workers compensation insurance is required to cover employee injuries.
  • Auto accidents: If you own the car, commercial auto insurance coverage financially covers you in the event of an accident while doing business. If you use a rental automobile for business, you’ll need hired or non-owned auto insurance.
  • Professional mistakes: If you make mistakes while working, an errors and omissions insurance (E&O) policy will protect you. Professional liability insurance is another name for an E&O policy.
  • Theft and damage to your business property: Your business property or equipment will not be protected from theft or damage under general liability insurance. To protect against such issues, you’ll need a commercial property insurance policy.
  • Intentional acts: Intentional acts like throwing a computer out the window are not covered in an insurance policy. Furthermore, general liability insurance will not cover you or your employees if they commit willful, illegal acts or wrongdoings.
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How Much General Liability Insurance Coverage Do I Need?

According to Insureon, most small businesses opt for standard coverage limits of $1 million per occurrence and a $2 million total policy limit for their general liability insurance. This type of policy will cover one general liability insurance claim up to $1 million, with a total limit of $2 million for all claims during the policy period. A typical policy period is one year.

What Does General Liability Insurance Covers For Small Businesses

Is General Liability Insurance Required By Law?

Although business liability insurance isn’t required by law, failing to purchase it exposes your company to a number of costs that could bankrupt it.

How Much Does Business Liability Insurance Cost?

Are you wondering how much general liability insurance is? According to Insureon, the average monthly cost of general liability insurance is $42 per month. 17% of Insureon’s small business customers spend less than $25 per month on average on their plans.

The cost of business liability insurance is determined by the size of your company, its industry, its location, and the amount of coverage you require.

You can control the cost of general liability insurance by selecting the coverage limits that best suit your needs. A business owners policy (BOP) combines business property and general liability insurance in a practical and cost-effective way. However, you can purchase general liability insurance on its own.

The cost of general liability insurance is determined by a number of factors, including:

  1. Your type of business: General liability insurance is more expensive if your company is high-risk.
  2. The number of years your company has been in operation.
  3. Your building’s size, location, and condition are all important factors.
  4. Details of policy such as deductibles and policy limits.
  5. Your company’s insurance claim history.
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Who Needs General Liability Insurance?

You should buy general liability Insurance if:

  1. The door of your business is open to the general public.
  2. You made an advertisement for your business.
  3. You use social media for yourself or your business.
  4. You conduct business at third-party locations.
  5. You need insurance coverage to be eligible for job contracts.
  6. You have contract workers.

What Kind of Businesses Benefit from Commercial General Liability Insurance?

The categories of businesses that should purchase general liability insurance are:

  1. Real estate agents
  2. Small business owners
  3. IT contractors
  4. Landscaping companies
  5. Consultants
  6. Artisan contractors
  7. Marketing firms
  8. Janitorial services

The Dangers of Not Having General Liability Insurance

The risks of not having general liability insurance coverage can be devastating. In most cases, your business can be liquidated.

Without general liability insurance, dealing with judgement, legal settlements, and lawyer fees may be very costly and possibly bankrupt a company. A lawyer’s hourly rate can exceed $100. According to The Hartford, legal expenses might surpass $75,000 if the allegation gets to court, and even if the action is dismissed, you could spend several thousand dollars.

Your company’s financial security is jeopardized if you don’t have general liability insurance. Also, you risk losing clients who won’t do business with you. You’ll need a certificate of insurance to show that you’re covered. An insurance policy’s coverage type and limits are detailed in this official document.

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