Why You Need General Liability Insurance

Every business has risks they need to insure—learn how general liability insurance keeps your business safe and how our team can help.

As a small business owner considering general liability insurance, you might assume that the possibility of a customer blaming you for an accident or defective product is slim to none. But in the event of a lawsuit, can you be sure that your business will have the means to defend itself, pay a settlement, and come out unscathed?

What Is Commercial General Liability Insurance?

Regardless of industry, size, or status, every business needs general liability insurance to cover financial loss in the event of a lawsuit. Commercial general liability insurance covers negligent acts caused by your employees, products, services, or work functions. Aside from keeping your business safe, you may need general liability insurance to satisfy contract requirements from landlords or clients.

Business liability insurance coverage typically covers three specified risks. The limits on your policy dictate the amount received in a claim settlement. You can use your claim settlement to cover legal defenses and compensatory damages to clients.

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What General Liability Insurance Covers

When choosing to purchase business liability insurance coverage, it can be difficult to understand which risks will be covered and the events that could lead to a claim. It is easy to understand why you need property insurance to cover your assets in the event of a fire or storm, but commercial liability insurance is an abstract concept. The three coverages in a commercial general liability policy include personal and advertising injury, bodily injury and property damage, and medical payments. Policies contain an aggregate limit that caps the total amount paid in a policy period, as well as a limit for each occurrence leading to a claim.

Personal and Advertising Injury

In the event that your business causes damage to another’s reputation through slander, false or malicious prosecution (personal injury), or infringes on copyrights or intellectual property (advertising injury), your business liability insurance coverage can cover legal costs and damages. For example, if you are found liable for taking another company’s advertising strategy or slogans without permission, the company may sue you for damages. Your legal costs and settlement amounts would be covered by your general liability policy up to the per occurrence limit, which usually starts at $1 million.

Bodily Injury and Property Damage

If a customer falls in your office due to a wet floor, breaks their leg, then sues your company, the subsequent legal costs would be covered under the bodily injury section of your commercial general liability policy. Similarly, if one of your employees improperly installs a cabinet in a client’s home and it falls, causing property damage, your business could be found liable. This scenario is covered in the property damage portion of your policy. When purchasing liability insurance for a small business, it is essential to think of the potential scenarios in which a customer might file a lawsuit and choose your liability limits accordingly.

Medical Payments

The medical payments limit in a commercial general liability insurance policy is typically a fraction of the per occurrence limit for the other coverages. This coverage exists to prevent a lawsuit in the event of client injury. For example, if a client gets a concussion after slipping on ice outside of your store, they may seek payment for their ER visit without filing a lawsuit against your business. In this event, even though your business is not legally at fault, coverage is triggered to prevent the injured client from moving forward with a suit. Therefore, only relevant medical, surgical, or funeral expenses are paid up to the policy limit.

What To Consider When Choosing Business Liability Insurance Coverage

When a business owner determines that they need general liability insurance, they should consider which insurance agent and company they will trust to place their coverage. At Southpoint Insurance, we have decades of experience building personal relationships with our many insurance company partners, which allows us to find the best coverage for your needs. We will help you determine your business risks, what limits are right for you, and any specialized coverages that you may need. Because of our close underwriter relationships, we can gather multiple quotes from different carriers, seek out the best rates, and give you options that are unrivaled by other agencies.

See What Other Coverages We Offer

Business liability insurance coverage is only the starting point for your company’s needs. Click below to learn more about the coverages we offer.

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