General Liability Coverage
Generally liability (GL) insurance covers common business risks from third parties (people outside your business) such as bodily injury, property damage and advertising injury that are caused by your business’ operations or products or injuries that occur on your business premises. This coverage protects your business from the high costs of lawsuits and helps you meet lease and contract requirements.
FAQs
What does general liability insurance cover?
Bodily injury and property damage covers both bodily injury to a third party and property damage to a third party resulting from your business operations. It can pay for medical and legal expenses, including judgments and settlements resulting from a lawsuit.
Example: One of your clients slips and falls at your business premises and injures themselves
Example: While installing electrical wiring at a client’s home, you accidentally start a fire that damages their property
Products and completed operations includes coverage for products (goods you manufacture, sell or distribute as part of your business) and completed operations (faulty services or work performed by your business).
Example: Your restaurant serves a customer undercooked food and the customer becomes ill
Example: You are a plumber and while installing a shower drain, you fail to properly seal the drain, which causes a flood in your customer’s home
Personal and advertising injury provides coverage for written or verbal communications that cause harm. This includes slander, libel and copyright infringement.
Example: Your employee tweets a rumor about a competitor’s poor customer service and the competitor alleges damage to their profitability and reputation after the tweet goes viral.
Medical payments provides coverage for non-employee medical expenses that your business is responsible for.
Example: A light fixture falls on a customer at your bookstore and causes injury
Damage to premises rented to you covers fire damage to land or buildings that you are occupying for 7 days or less.
Example: An insurance agency rents a banquet hall for a holiday party. The partygoers get out of hand and cause a fire that results in $15,000 worth of damage.
Occurrence vs claims-made
There are two basic types of general liability coverage, occurrence and claims-made. An occurrence policy covers claims that occurred during the policy term, regardless of when that claim is reported. A claims-made policy only covers claims that are filed during your policy period for a loss occurring on or after you retroactive date.
What doesn’t general liability insurance cover?
Like any type of insurance, general liability coverage has exclusions. It is important to review your insurance policy with your agent to understand what isn’t covered by your specific policy. General liability doesn’t cover willful negligence or intentional injury or property damage as these are often criminal offenses. Generally, this type of coverage doesn’t cover the following types of losses:
- Professional errors and omissions require a professional liability or errors & omissions liability policy
- Employee injuries are covered by workers’ compensation insurance
- For coverage of the risks associated with selling and serving alcohol, you’ll need liquor liability insurance
- Business vehicles are covered by auto insurance, rather than general liability coverage
- Employee discrimination and harassment are covered by employment practices liability insurance
- Damage to your business property is covered by business property insurance, not general liability coverage
Do I need general liability insurance?
Most businesses need general liability coverage. If any of the below situations describe your business, you likely need general liability.
- You own or rent a commercial space
- You handle client property
- You have contracts with clients or with other business entities
- You work directly or closely with customers
- Your business space is open to the public
Is general liability coverage required?
Typically it is not required by law but many states mandate it for certain industries, like construction. Even if the state doesn’t require you to have general liability coverage, it is likely required by your landlord, clients or your mortgage company.
What general liability limits do I need?
Most small businesses select the standard $1,000,000 per occurrence (or per claim) and $2,000,000 aggregate limits. Higher limits are available for businesses that need more protection and that have increased exposures. If you need general liability insurance to meet contract or lease requirements, you’ll want to ensure that your coverage limits are adequate. Typically, the higher your risk, the more coverage you’ll need.
What does general liability insurance cost?
The cost of a general liability policy varies depending on many factors. Some factors that can impact pricing include: the size of your business, your revenues, the location of your business, the risks associated with your industry, the number of employees you have and the limits and coverages selected.