What General Liability Insurance Do You Need for the Business?

Liability insurance or general liability insurance is defined as insurance that protects from claims by another of personal injury, property damage or negligence on your part or the part of your business. With liability always comes blame so these are damages to another or another’s property because of something you or your business allegedly did that the claimant is trying to hold you responsible for.

The general liability insurance policy will cover court costs and legal settlements up to the amount you are insured for. What’s not covered in these policies are intentional damage and contractual liabilities. You need general liability insurance to protect against claims by employees of your business and others who come in contact with it, such as an outside cleaning person or a delivery person. Probably the simplest example are sidewalks and walkways at your place of business. If someone slips and falls and is injured on your walkway, you could be liable for the injuries without general liability insurance.

Comprehensive General Liability Insurance Coverage (CGL) -- A comprehensive general liability insurance policy or often called a commercial general liability policy typically protects the small business person from those liabilities of non-workers coming to his or her place of business. The CGL will protect against the typical "slip and fall" and other injuries at the workplace, medical treatment, court costs and settlement costs and, should the court’s opinion be appealed, the cost of bonds during appeal. There are other types of liabilities that these policies typically cover such as advertising claims. What you need to understand is what the policy does not cover. Comprehensive general liability policies are sometimes mistaken by small business owners to be Workers’ Comp policies, they are not. If an employee is injured on the job, you better have an up-to-date Workers Comp policy. These policies also do not cover an automobile accident that an employee might have and they do not cover liability regarding the products or services you sell.

You need to meet with a qualified insurance agent and fully understand all aspects of the CGL. While any good insurance agent can help you with the "slip and fall" aspect of a policy, you really need to work with someone who specializes in your industry. Let's say you are an architect and you are about to open your own practice. You certainly can call the local insurance agent in your area who handles all manner of business insurance. Or you can contact an insurance agent through your local architect's association who may have a focus or specialty in your business (as well as a few others). That insurance agent may actually work with 100 or so architectural firms in the region and can fill you in in great detail what you need. We used architects professional liability insurance as an example, but there are insurance specialists in virtually every industry. There is a great need for insurance specialists to handle, for example, personal trainer liability insurance, medical professional liability insurance, contractors liability insurance, lawyers professional liability insurance, fiduciary liability insurance and many other fields.

Professional Liability Insurance Coverage – If you provide certain services within your company, you should consider carrying a professional liability insurance policy, also known as an errors and omissions policy. This type of policy protects you from malpractice, omissions, errors, and negligence. In many states, MDs are required to carry malpractice insurance.

Product Liability Insurance Coverage – If you produce a product in your business, you likely need product liability insurance. If someone is injured by your product, you and your business could be in serious jeopardy without this coverage. The cost of coverage ranges all over depending on what you do. If you make and sell fireworks, you coverage will be dramatically higher than a company that produces greeting cards.

Five Tips on Buying General Liability Insurance

Here are five ways for you to get the most general liability insurance policy for the money.

  1. Join a trade association in your business because insurance companies will typically create policies attractive to those in that business. For example, we know that in the pool and spa construction business, certain insurance companies will sell "pool pop up coverage." It is a special coverage probably needed only in that industry.
  2. Go to association membership meetings and become acquainted with your counterparts and determine how much specific coverages they carry.
  3. Meet an insurance broker at that meeting or in that industry who specializes in it. Once again, using the pool and spa industry, there are independent insurance agents who specialize in that industry and a few others. They are extraordinarily knowledgeable about the business and they have intimate knowledge of the claims volume and type in that industry. If as a pool and spa contractor you were to go to your typical agent on Main Street USA, it is quite likely that they would have one or no customers in the pool and spa business.
  4. Compare coverages of different insurance companies. Once again using the pool industry, working with that specialized agent, he or she will tell you the key coverages that you need that are special to that industry such as pool pop up coverage and perhaps diving board accident coverage. Then you can compare which companies offer the coverages and at what price.
  5. Finally, and we cannot stress it enough, buy insurance as a package deal, rather than separate policies. The amount separate policies could cost you could be remarkable compared to what the package will cost you. Just make sure that everything you need is in that package.

Why You Need to Work with an Insurance 'Specialist'

We highly recommend as you start a business that you hire an insurance specialist to ensure that you have the proper coverages. In an article elsewhere in this section, we report that a pool and spa contractor, among other coverages, may need "pool pop up coverage" and "diving board coverage." Were that contractor to go to just about any insurance agent in his town, most likely that agency would not have a pool contractor as a client and know little about the ins and outs of the industry.

Check this list to get get an idea of the special liability coverages certain businesses need: animal liability insurance, architects professional liability insurance, business home insurance liability, commercial auto liability insurance, commercial business liability insurance, commercial insurance liability, day care liability insurance, directors liability insurance, dog insurance liability, farm liability insurance, general commercial liability insurance, general contractor liability insurance, home inspector liability insurance, horse liability insurance, hunting liability insurance, independent contractors liability insurance, insurance liability malpractice, insurance liability malpractice medical, internet liability insurance, landlord liability insurance, lawyer professional liability insurance, liability insurance for nurse, liability insurance for personal trainers, liability insurance massage therapist, liability insurance small business, massage liability insurance, massage therapist liability insurance, massage therapy liability insurance, nurse liability insurance, nursing liability insurance, patent attorney professional liability insurance, personal chef liability insurance, personal excess liability insurance, personal training liability insurance, personal umbrella liability insurance, pet sitter liability insurance, pharmacist liability insurance, physicians liability insurance, professional liability insurance for nurses, professional liability insurance malpractice insurance, rental car liability insurance, small business general liability insurance, student liability insurance, teacher liability insurance, tradesman liability insurance, and united states liability insurance.

Insurance Resources

Insuranceonline -- The National Association of Insurance Commissioners (NAIC) presents Insure U for Small Business to provide helpful information, tips and considerations about insurance for owners of small companies and home-based businesses. This curriculum is organized around these subjects:

Health Insurance Information -- Georgetown University Health Policy Institute

Business.gov -- This is a terrific website you should add to your bookmarks and favorites and refer to it often. It has great advice and can assist you with subjects like business insurance and a lot of other things.

Links to Insurance Articles in This Section

Workers Compensation Insurance

Home Business Insurance

Comprehensive General Liability (CGL)

Comprehensive General Liability (CGL)

Professional Liability Insurance

Product Liability Insurance

Product Liability Insurance for Small Business

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