Finance
Here’s Everything You Need to Know About General Liability Insurance

Here’s Everything You Need to Know About General Liability Insurance

General liability insurance is typical insurance for businesses. If you are a business person, you would definitely hear this term. And if not, we will make you aware of it. Operating a business in itself involves a lot of risks. You never know what will happen next. Some days are full of fortune. On the other hand, some days are just like dry spells. No one would want to add more risk to their business and secure it in every possible way. Henceforth, general liability insurance acts as a savior.

Meaning and Definition of General Liability Insurance

Also referred to as business liability insurance, general liability insurance protects the owner and his business from ‘general claims’, including property damage and physical injuries. Every business ought to have general liability insurance. In case if your business is ever legally responsible for property harm or physical damages, this insurance will save you. The insurance policy will bear all the medical costs and the attorney charges. Moreover, liability insurance is an inevitable part of an insurance strategy. Every businessperson out there should plan on buying it. Some people also call this policy a commercial general liability (CGL).

What is Covered by General Liability Insurance?

General liability insurance covers various claims. These claims are quite common and occur in every business operation. However, if you don’t have this insurance, you’ll have to cover all the losses from your personal pocket. So, if you don’t want that to happen, buy a commercial general liability. It usually covers the third-party losses and not personal losses. General liability insurance can cover the following claims-

#1 Physical Damage

Imagine there is cleaning going on in your shop. Meanwhile, a customer arrives and slips right away. The person gets hurt and is now on his way to sue your business. In such a case, you can resolve the matter by paying the customer’s medical bills. The general liability insurance has bodily injury coverage that bears the medical expenses.

#2 Property Damage

Your worker has gone to a client’s house to deliver some goods. By mistake, your worker breaks an expensive item in their house. The client is extremely angry and is asking you to compensate for the loss. Fortunately, you have general liability insurance. It includes property damage liability coverage that will bear the loss.

#3 Goodwill

Some situations occur when the business owner or an employee indulges in a controversial debate with the customer. It might enrage the customer. The customer in turn can file a lawsuit against your business. But if you have liability insurance, you can easily manage the expenses to defend your business.

#4 Copyright Issues

For instance, you have uploaded a picture on your business website for advertisement. You forgot to mention the source and did not give credit to the photographer. In this situation, the photographer can file a copyright case against your business. henceforth, if you have an insurance policy, you can easily tackle this situation.

Which Claims are Not Covered by the General Liability Insurance?

There are certain issues that general liability insurance doesn’t cover. Here are a few examples.

  1. Any employee-related issues. Such issues are covered in “Workers Compensation”
  2. Damage to self-owned property. These are covered in “Commercial Property Insurance”
  3. Any professional mistake that led to the client’s loss. Such issues are covered in “Professional Liability Insurance”
  4. Data breach and cybercrime. They are included in “Cyber Liability Insurance”
  5. When the officer or director takes any decision, and a claim bud from there. This is covered in “Directors & Officers Insurance’’

Who Needs a General Liability Insurance?

You need to keep in mind, that this insurance isn’t an option. As a business owner, you should buy general liability insurance. There are various business-related insurances available in the market. Henceforth, it can be quite tricky to pick out the best one. You should always contact a reputed insurance company who will guide you. General liability insurance is the most common business insurance. Most people consider it as financial security. If you are new to the business community, you should consider this insurance policy. This financial instrument will help your business cover most of the losses. If you work in someone else’s business premises, it is necessary for you to buy this insurance policy. But if own a business, you definitely need this one. Usually, many companies ask their contractors to have general liability insurance.

Types of Liability Insurance

There are various types of liability insurance. Some of them are mentioned below.

  1. Commercial Umbrella Insurance- On top of the prevailing liability plans, this provides further limits. Besides that, it is useful in covering expensive claims
  2. Employment Practice Liability Insurance- If any of your employees ever file a harassment lawsuit against you; you can cover the legal defense costs using this policy.
  3. Management Liability Insurance- This protects the directors and other authorities from expensive claims.
  4. Commercial Auto Insurance- This policy is for your commercial vehicles. It compensates for any loss that occurred to you or your employee while riding the commercial vehicle.
  5. Public Liability Cover- This is specially designed for those businesses that have a lot of public interaction. Moreover, it protects them from unnecessary financial risks and legal liabilities.
  6. Professional Indemnity Insurance- This policy safeguards businesses against legal claims for mistakes, lapses, and professional neglect.
  7. Employer Liability- Also known as Business Liability Insurance, this covers the employee’s liabilities. If an employer wants to cover the employee’s liabilities when they get hurt while doing the job; they can go for this.
  8. Product Liability- This policy is especially for businesses that are indulged in tobacco production, food & medical products, chemicals, etc.

How is the Liability Insurance Premium Decided?

There are several factors that an insurance company considers before deciding the premium amount. Firstly, the amount of risk that the product of the company comes up with. The higher the risk, the more the premium amount. Secondly, the insured person’s claim history. And thirdly, the company’s business record. Some insurance companies also check credit scores. However, that is not a mandatory factor.