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What General Liability Insurance Covers

What Does General Liability Insurance Cover A Closer Look

General Liability Insurance Explained

Tricia has nearly two decades of experience in commercial and federal government lending. Her expertise is highlighted throughout small business loan content on Fit Small Business.

This article is part of a larger series on General Liability Insurance.

General liability insurance, also known as business liability insurance, covers businesses for financial losses due to third-party claims of bodily injury, reputational injury, or property damage to others. Its an essential liability coverage for all businesses, given that all businesses are exposed to these types of risks.

If youre looking for general liability insurance for your business, working with an insurer like The Hartford is a good idea. The Hartfords team of insurance specialists can evaluate your small business risk and point you toward the appropriate coverage.

Damage To Premises Rented To You

General liability coverage typically includes coverage for any damages to non-owned land, buildings, or structures. The insured, or their business, must be legally liable for the damages for coverage to apply. For instance, a local restaurant rents property that catches fire due to a negligent employee leaving a frying pan unattended. General liability might cover the damages since the business caused the fire. In contrast, this coverage wouldnt apply if a lightning strike started the fire.

What General Liability Insurance Does Not Cover

While general liability covers numerous scenarios, its important to note that it does not cover everything. General liability insurance does not cover automobile accidents for your companys vehicles. It does not cover employee injuries or illnesses that occur as a direct result of the work they perform for you. General liability doesnt cover you if you make a professional mistake, and it doesnt cover you if your business property or building is damaged.

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Do Workers Comp And General Liability Insurance Overlap

There are similarities between the coverage that general liability and workers comp provide, but there is technically no overlap.

Both workers compensation and general liability insurance help protect businesses when an accident occurs or someone files a lawsuit against the business.

Like general liability insurance, workers compensation insurance may be requested by certain clients before they agree to sign a contract. Additionally, businesses may need proof of insurance to comply with license requirements or state law.

Many of the same factors are used when determining general liability and workers comp insurance costs, such as:

  • Type of business operations

Damage To Someones Property

3 Things General Liability Insurance Covers

Your general liability insurance policy covers you for damage that you cause to someones property. The best general liability insurance for small business includes both significant and less serious accidents.

Here are some examples:

Landscaping

You didnt see a small rock during your pre-inspection of a lawn you are mowing. When your mower goes over it, the rock goes airborne and shatters a large plate-glass window. The client insists that you pay for the replacement cost.

Construction

You park your van in an office parking lot for a renovation construction project. As youre taking out your tools, you slip and scratch the CEOs shiny red Porsche. You have to pay for the cost of getting the entire car repainted at a certified dealer.

Beautician

Your beautician assistant is giving a client a manicure and drops the bottle of nail polish. It smashes on the floor, splashing scarlet nail polish all over the clients expensive Gucci handbag. The client wants you to pay for a replacement bag.

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Does General Liability Insurance Cover Property Damage

General liability insurance can cover expenses related to property damage, but only to property that does not belong to you.

can help protect the physical items you need to operate your business:

  • Furniture and furnishings
  • Physical structures.

A combines general liability insurance and commercial property insurance into one package that is usually less expensive than buying the coverage separately.

Learn more about .

Coverage A: Bodily Injury And Property Damage

Coverage A is the section of the policy that covers claims of liability associated with bodily injury and property damage to others. Its important to note that mental injury or emotional distress can also be included in bodily injury.

Heres an example of a bodily injury liability claim:

A customer visits your store, and a large box of merchandise falls from the top shelf and hits them in the head, causing a concussion. Your business has a $1 million per occurrence and $2 million aggregate general liability policy and files a claim. The insurance company feels its best to settle and offers the customer $200,000, which they accept. Your aggregate general liability limit is now reduced to $1.8 million.

A good property damage claim example involves a plumbing business that does some basic pipe replacement at a house. Two weeks later, one of the pipes bursts and floods the kitchen, causing $80,000 worth of damages. The plumbing company has a $1 million per occurrence and $2 million aggregate general liability policy, which includes $1 million for products and $2 million for completed operations. The $80,000 loss is paid by the insurer, leaving $1.92 million for the remaining policy term.

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Gather Your Information And Documents

Before you start shopping for a general liability insurance policy, youll want to make sure you have all of the necessary information handy. Heres what youll need:

  • Basic contact information
  • Information on what your business does
  • Number of employees
  • Details about your business location, including if you own or rent the building where your business is located
  • Documentation to show how long you have owned your business
  • Estimated business revenue for the upcoming year

Damages To Your Own Property

General Liability Insurance Coverage Definition

General liability insurance does cover property damages, but only under specific circumstances. General liability insurance is designed to protect you from third-party lawsuits, which means it only covers damages to your property by an outside party, like a customer.

If you or one of your employees drives a tractor through your own window, your general liability policy typically wont cover it.

Bummer.

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How To Buy General Liability Insurance

Purchasing General Liability Insurance is quick and easy through Coteries online quote tool. Start by entering some basic information about your business, industry, and preferred coverage level to calculate your premium. Once youre happy with your quote, continue on to purchase a policy.

Then sit back and enjoy the peace-of-mind in knowing all that youve worked so hard to build is protected in the event a claim is made against your business.

Compare General Liability Insurance Quotes

Whether you buy general liability insurance as a standalone policy or as part of a BOP, youll want to compare business insurance quotes from several insurance companies. Thats because insurers dont price their policies the same.

You can get free business insurance quotes online or by speaking with an independent insurance agent.

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What Does General Liability Insurance Cover

General liability insurance policies typically cover you and your company for claims involving bodily injuries and property damage resulting from your products, services or operations. It may also cover you if you are held liable for damages to your landlords property.

General liability insurance doesnt coveremployee injuries, auto accidents, punitive damages , workmanship, intentional acts or professional mistakes.

How Much General Liability Insurance Do I Need

General Liability Insurance for Small Business

Our small business insurance isnt one-size-fits-all. Each business is unique and has different insurance needs.

The coverage you need depends on several factors, including:

  • The type of work you do
  • How many employees and subcontractors you have
  • The level of risk your company faces
  • The state where you work
  • When you complete an instant quote online with Next, you can review options and adjust limits to your preference.

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Risk Purchasing And Risk Retention Groups

Risk purchasing groups are formed under the provisions of the federal Liability Risk Retention Act of 1986. A purchasing group consists of individuals or firms of like characteristics who share similar insurance needs. The eligibility criteria for members of a purchasing group are set by LRRA. Once formed and registered with the State of Texas, the group may use its purchasing power to obtain liability insurance and benefits at prices that may be lower than individuals or businesses could negotiate separately.

If a purchasing group buys insurance from a licensed insurer, it may be protected by the Texas Property and Casualty Insurance Guaranty Association if the insurer has capital and surplus of $25 million or more. If the purchasing group is not protected by the Texas Property and Casualty Insurance Guaranty Association, then it must disclose this to its members.

Licensed insurers that provide coverage to members through a purchasing group must file policy forms and rates with TDI. The policies and rates must comply with all statutes that apply to licensed insurers.

TDI does not regulate the policy forms and rates offered to members through a purchasing group by surplus lines insurers. In addition, surplus lines insurers are not protected by the Texas Property and Casualty Insurance Guaranty Association.

What Other Types Of Insurance Might My Small Business Need

While general liability insurance protects you, your business, and your employees in the case of bodily injury, property damage, or personal injury claims, small business owners should consider other types of insurance:

Workers compensation insurance provides medical, disability, survivor, burial, and rehabilitation benefits to employees who experience illness, injury, or death due to a work-related incident. In nearly all states, and with few exceptions, businesses are required by law to carry workers compensation insurance. Get a workers comp quote in 3 minutes.

Commercial auto insurance covers liability and physical damage for vehicles owned by your company.

Cyber insurance protects your business against data breaches and cybercrime such as computer hacking and stolen information.

Business owners policy insurance offers bundled protection from claims related to property damage, fire, personal injury, advertising injury, and other issues.

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What General Liability Trucking Insurance Covers

General liability insurance is, as its name suggests, a type of coverage that protects against the most general and common forms of liability that a trucker could find themselves responsible for as they do their job. General liability focuses on the public and how truckers engage with the public, so businesses will need separate insurance for the truckers themselves and their trucks.

The primary facet that general liability covers is damage to someones property. If you make a delivery to a site and destroy property with your truck by tearing up the ground or backing the truck into the side of the loading bay, your insurance policy will pay the customer for those damages.

In addition, the policy will cover injuries to the individuals themselves. An injury could occur as the truck is being unloaded, or it could be more nebulous such as a trucking company being held responsible for failing to conduct background checks if one of their truckers physically assaulted a customer.

Moreover, some types of general liability insurance will also cover advertising injurythat is, if your business accidentally infringes on the copyright of another entity by improperly using logos.

Is General Liability Insurance Required By Law

5 Basic Coverages Included In Commercial General Liability

Generally not, but states may mandate it for certain industries like construction and cannabis. Depending on your type of business, you may also need coverage to get a professional license in your state.

While commercial general liability insurance isnt typically required by law, its still likely required by your landlord, mortgage company, business partners, or clients. For example, are required to carry coverage when their sales reach a certain threshold.

A landlord or client may ask your business to show an ACORD certificate of insurance as proof of your general liability insurance coverage. This document verifies that your business can handle any personal injury or property damage lawsuits.

Most importantly, the certificate gives your property manager, bank, or customer peace of mind that they wont be stuck paying the costs of a lawsuit against your company.

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Is General Liability Insurance Tax Deductible

General liability insurance premiums can typically be deducted from your taxes. Its important to consult with a licensed accounting professional to make sure you qualify.

The IRS categorizes payments you make for this type of insurance to be both an ordinary and necessary business expense so be sure to keep a file of how much you pay every year for your policy.

What Is Not Covered Under Commercial General Liability Insurance

Most CGL policies do not cover intentional or expected damage by the insured. They also do not cover damages due to intoxication , pollution, automobiles or other vehicles, damage to a business’ work, or additional liabilities that the insured might take on. A business that is involved in these types of risks should purchase additional insurance in order to be fully covered.

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What Is The Difference Between General Liability And Professional Liability Insurance

General liability covers customer injuries, customer property damage, and advertising injuries. Professional liability insurance covers disputes over the quality of professional services.

Almost all businesses need general liability insurance, but businesses that provide professional services need added protection from mistakes and unhappy clients.

Thats where professional liability coverage comes in. This policy helps professionals like accountants, lawyers, consultants, and insurance agents avoid high costs from lawsuits related to the quality of their work.

For some industries, such as media and advertising professionals, general liability insurance will not cover libel, slander, or other advertising injuries. These businesses instead require media liability insurance, which is a form of professional liability insurance.

What Is Liability In Insurance Coverage

General Liability Insurance Coverage: Key Issues In Every State, 3rd ...

myCOI brings certificate of insurance compliance management to a whole new level. We protect your company against the risk of underinsured claims, costly litigation and failed audits.

Automate Your COI Tracking

Theres no more need to worry about stacks of certificates cluttering up your office or hours of frustrating phone calls and emails to chase down certificates. myCOI Central provides your company with a solution to automate your insurance certificate requests, collection, and compliance resolution, while also giving your team a single, centralized repository to view compliance.

Protect Your Business From Costly Claims

Ask your CFO or Risk Manager just how much claims and lawsuits can cost your business. If you are collecting certificates just to confirm they were received, you have no guarantee that your requirements are being met. myCOI Central is built on a foundation of insurance industry logic to ensure you remain protected with the appropriate coverage.

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Professional Liability Insurance For Contractors

The previous section of this article hopefully answers the following questions: Does liability insurance cover my car if someone hits me? Does liability insurance cover theft?

But what is professional liability insurance for contractors?

This type of insurance covers contractors and other building professionals for construction errors and other losses which occur during a project.

Searching for professional liability insurance examples online can help you understand the concept. Your research can also show you how important insurance is to your company.

Many professional liability insurance companies have websites that can educate you about the topic. Some have chat functions that connect you with an insurance representative who can answer any questions not covered on the site. You can also visit these websites when you shop for coverage. You could also visit independent financial and insurance websites to get unbiased information without the pressure to buy a policy.

If you need additional support, you can contact an insurance agent and ask them all of your questions. They can provide answers and advice that can inform you and steer you to the coverage that is right for your company.

The Risks Of Not Having General Liability Insurance

Facing judgments, legal settlements and lawyer fees without the aid of general liability insurance can be very expensive and even bankrupt a business. Legal counsel can cost more than $100 an hour. Court costs may exceed $75,000 if the claim goes to court, and you may need to spend several thousand dollars even if a lawsuit is dropped, according to The Hartford.

Not having general liability insurance puts your business at financial risk. And you may lose clients because they wont do business with you if you dont have general liability insurance.

To prove that you have insurance coverage, youll need a certificate of insurance. This official document lists all the coverage types and limits on an insurance policy.

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Liability Protection For Directors And Officers

Usually, the structure of a manufacturing business places directors and officers at the top of key decision-making. Within the scope of their managerial responsibilities, these officials may sometimes make decisions or take actions that attract allegations of wrongdoing or even lawsuits. Your management team may be subjected to a probe after such claims and will need to be defended. Unfortunately, a standard GL policy doesn’t provide employment practices liability protection. For this coverage, you should get management liability insurance. The policy can protect your company and its directors against claims raised by stakeholders like your past or current employees.

Why You Should Get General Liability Insurance For Your Florida Business

Commercial General Liability Insurance 101

To understand general liability insurance, just think about all the product recalls where someone was injured or killed while using a companys product. For example, if you create and design a hand cream or lotion and that product burns someones skin or causes a severe rash, you could be held liable. If you design ceiling fans and faulty screws are given with the product that causes a blade to come loose and fly into someones six-thousand dollar TV, you could be held liable for the damages. Without general liability insurance, your company could be forced to pay for these incidents out of your operational budget. For small businesses, just one claim of this nature could put them out of business.

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