This article provides an overview of general liability insurance. You will learn its importance, types, and other necessary information.
In a world of risks and uncertainties, it is better to have coverage that protects you against the high costs of lawsuits. Business liability insurance provides facilities where it helps business owners secure leases and contracts. Even if a business is not literally responsible, a customer could sue over an accident at your shop or office.
In addition, business liability insurance delivers protection when a business is held responsible for another person’s property damages and or losses. To learn more about general liability insurance for businesses, follow this article. It will guide you in thoroughly understanding everything essential you should know about it.
What is general liability insurance for business?
General liability insurance protects you and your business from “general” claims such as physical injuries and property damage. These claims may result from your company’s products, services, or operations. Without general liability insurance, you could end up paying out of your business’s income and even go bankrupt in the worst-case scenario. Almost every business needs general liability insurance. General life insurance is also known as “business liability insurance” or “commercial general liability insurance.”
A business is protected from various possible claims in general liability insurance, including bodily injury, copyright infringement, property damage, reputational harm, and advertising injury. Any physical injury caused by a business is a common claim. Suppose someone comes to your place of business and is injured; a general liability policy would cover their medical expenses. A physical injury claim could be something as simple as a fall by a customer at a store or office.
Property damage is another joint liability claim. Your business can be legally responsible if a person’s property is damaged while at your company. These claims could also include damage to a client’s home or other property if you visit them on business. Moreover, copyright infringement claims come about if you are accused of using someone else’s work in your business ad or other business marketing without permission.
Apart from all the coverage, if you say something about another company that hurts their business in a news interview, reputation harm may occur. Also, if your business defames another person, business owner, or company, advertising injury can occur. An excellent way to extend your business liability insurance is by purchasing a commercial umbrella insurance policy which gives you an extra layer of protection from expensive lawsuits.
What does general liability insurance cover?
General liability insurance covers physical injuries and property damage. The risks that come up during regular business operations. It can get expensive for small businesses, and many don’t have the resources to cover a liability claim. The average fee of a slip and fall claim is $20,000. If you face a reputational harm lawsuit, be prepared that it might cost about $50,000. Without liability insurance coverage, your business would have to pay these expenses out of pocket.
General liability insurance covers the property damage from employee accidents, such as breaking a client’s window while working at their home or disturbing the sanitary system while repairing. The insurance can help cover the repair or replacement costs to fix the damage. It also covers personal injury like defamation or slander. General insurance liability can help pay for your business’ defense costs if it gets sued.
In addition, general insurance liability covers physical damage. If a customer slips and falls, the insurance covers the expenses. Also, general insurance covers administrative costs to handle covered claims, court costs, judgments and settlements for covered claims, expenditures for property, damage claims against your business, and medical expenses if someone gets injured at your company.
Despite all the coverage general insurance liability provides, there are claims it doesn’t cover. For example, it doesn’t pay defense costs for intentional copyright infringements or willful negligence, which can be criminal offenses. It also doesn’t cover deliberate injury or property damage.
General liability insurance for contractors
General liability insurance for contractors can protect you from third-party claims of physical injury or property damage resulting from business activity. General contractors, carpenters, roofers, and other construction workers should carry general liability insurance and may be required by their employer, city, or state. Contractors, tradespeople, and construction businesses that may require this type of liability coverage include:
- General contractors, masonry contractors, drywall contractors, concrete contractors, excavation contractors, paving contractors, and permanent yard contractors.
- Roofers, carpenters, plumbers, welders, electricians, painters, landscapers, appliance repair technicians, home inspectors, and do-it-yourselfers.
- Debris removal businesses, snow and ice removal businesses, tree service businesses, and interior and exterior construction companies.
Clients may ask you to show proof of general liability insurance before agreeing to work with your business. Your contract may stipulate that you provide a certificate of insurance as part of the agreement. Similarly, depending on the project or type of construction your business performs, your city or state may also demand that you meet general liability insurance requirements when seeking a permit or license for that work.
What does general liability insurance for contractors cover?
Usually, general liability insurance for contractors covers risks including:
If a customer stumbles and falls at a job site where you’re doing construction work, you could be liable for their injuries. Your general liability insurance can help cover associated legal, medical, and settlement charges if the person sues you. General liability insurance doesn’t cover injuries sustained by employees. For that coverage, you’ll require workers’ compensation insurance.
If you’re renovating a client’s house and accidentally damaging some of their furniture, you could be held responsible for that damage. Your general liability insurance can cover the cost to replace or repair the table and any legal fees if the client sues over the property damage. A general liability policy will cover damage to third-party property exclusively. You’ll require business property insurance to protect your commercial assets.
Personal and advertising injury
Assume an employee who works for your contracting company makes false statements about another general contracting company, and that company sues you for slander. In that case, a public liability policy can help cover legal and settlement expenses. Your policy can also cover personal injury claims associated with copyright infringement and libel.
Completed operations liability
If you repair plumbing at a client’s house and a pipe you installed bursts a few months later, you could still be liable for the damage since you performed the work. General liability insurance for contractors helps cover your legal costs and court-ordered damages.
Add-ons for general liability policies
Some insurance businesses offer add-ons for general liability policies. Add-ons provide extra protection that basic coverage doesn’t provide.
An equipment add-on can help cover the cost to replace or repair your tools and equipment if they break, are damaged, or are stolen. This coverage helps bridge the gap between general liability and commercial property insurance.
Data breach coverage
If a hacker breaks into your computer systems and steals customer information, data breach insurance can help cover the expenses associated with notifying clients, offering credit monitoring, and improving security.
Cost of general liability insurance for contractors
The cost of general liability insurance for contractors varies based on various factors, including business location, previous claims history, business size, and policy limits. The research reveals that the contractors and construction companies pay a median premium of less than $70 per month or $825 per year for general liability insurance. High-risk businesses like roofers pay more for general liability insurance than lower-risk companies such as paving contractors.
General liability insurance examples
To better understand the general liability insurance, check out the examples mentioned below to have a better idea:
- Suppose an overhanging decoration piece hanging in an outlet falls on the head of a shopping customer, thereby causing injury.
- A construction firm is building a house, and one of the tools falls off the roof and injures a pedestrian below.
- A restaurant employee mopped the floors and forgot to put up a caution sign to warn the customers about the slippery floor. The customer then slips and is harmed.
- In another case, If a restaurant’s undercooked meal causes poisoning to its patrons, the general liability insurance proves all the legal and medical expenses.
- If a skincare shop’s manufactured or sold products damage the customer’s skin, liability insurance coverage will be applied.
- If your business’s operations, services, or employees cause damage to third-party property, general liability insurance provides coverage to repair and replacement costs and legal costs. Like if a plumber sent by a plumbing services provider makes a wrong move with a high-power tool, causing damage to the client’s home.
- A contractor from a waterproofing company is blamed for worsening a crack on the home’s foundation.
- Workers from a snow removal company make a mistake with a snowplow, damaging a parked car.
- Delivery personnel, installers, or handypersons working within a client’s home accidentally knock over and break an antique object.
- While a renovation company does repair work on a home, a neighboring property sustains damage due to its operations.
- The sold products such as masks or gloves by the supplier prove to be ineffective due to damage or faulty design, and this causes illness or rash to the users.
- Reputational liability is the type that includes personal and advertising injury. It protects the insured against liability arising from offenses such as libel or slander. For example, your business is sued by an individual or company for slander or libel.
- Another business sues your business for using its advertising idea or anything replicated.
- Suppose one of your advertising materials is sued for copyright infringement. General insurance liability will be helpful.
- In another case, if another business sues your business for product disparagement, your company is sued for publications that violate privacy.
Comprehensive general liability insurance
Comprehensive general liability coverage protects against bodily injury and property damage claims from a contractor’s operations. This type of policy offers coverage for premises and operations. Significant exclusions include liability arising from the ownership, maintenance, or use of watercraft, aircraft, and automobiles. Other insurance policies usually cover these exposures.
The agency should require a comprehensive general liability endorsement which includes 13 add-on items that expand the coverage of the total general liability coverage. Add ons have a personal injury, contractual liability, and broad form of property damage. This form is being phased out, and most companies are now issuing policies on general commercial liability.
Progressive general liability insurance
Progressive general insurance liability is the largest seller of commercial auto insurance in the United States. Progressive serves as an intermediary for other types of business insurance like the general liability of worker’s compensation. You must be better off to go directly to the source for that coverage unless you plan to bundle your business insurance with an existing progressive car insurance policy. You can check the pros and cons of progressive business insurance liability below:
Commercial auto insurance covers many vehicles and uses, including dual personal and business use. In addition, discounts are available when you bundle business and auto insurance.
Most business insurance policies are through a third party as they are not direct. Another negative thing about it is that you can’t file a claim through progressive except for commercial auto insurance.
Types of progressive business insurance
For small business owners, progressive business insurance provides the following offers:
- General liability
- Professional liability
- Business owners policy
- Commercial auto insurance
- Workers’ compensation
- Cyber insurance
Most of the business insurance policies offered by progressive are through a third-party insurer who provides the quote, underwrites the policy, and ultimately handles any claims. The exception is progressive’s commercial auto insurance, which is dealt with in-house. Beyond those core business insurance products, progressive also provides liquor liability insurance, rideshare insurance, and inland marine insurance, among other options. Progressive delivers business insurance in all 50 states but doesn’t offer coverage in Washington, D.C.
Progressive commercial auto insurance
Commercial auto and truck insurance is the only business coverage offered directly through Progressive, so policyholders can take advantage of the company’s 24/7 customer service and earn various discounts. This service is obtainable online and by phone. Progressive doesn’t provide commercial auto insurance for emergency vehicles, race cars, or wheelchair buses, among their specialty vehicles.
Progressive business auto insurance quotes generally include liability, physical damage, medical payments, uninsured motorist, hired auto, and non-owned coverage. Still, you can customize your coverage to meet the needs of your business. Commercial trucks’ specific coverage options possess earned freight coverage and trailer interchange insurance. Progressive insures these types of commercial vehicles:
- Cars and SUVs, such as those with dual-use (personal and business).
- Motor homes and RVs.
- Pickup trucks.
- Tow trucks.
- Box trucks.
- Dump trucks.
State farm business insurance
State Farm delivers a variety of business insurance policies, from standard coverage like commercial auto insurance to specialized coverage like nonprofit directors and officers insurance. If you prefer a human touch scale, State Farm may be a good choice for your business. State Farm insurance policies are dealt with by a nationwide network of State Farm insurance agents. You can’t buy a policy or even get a quote without talking to someone.
On the other hand, If you want to manage your business insurance online, though, consider other providers. State Farm business insurance customers have limited online capabilities, including viewing a list of their policies, paying their bills, and contacting their agents. You’ll have to call your agent and manage things like claims tracking over the phone.
Pros of state farm business insurance
It offers many types of business insurance, including industry-specific packages with specialized coverage. Professional liability insurance can be added to a business owner’s policy. State farms can also provide retirement savings vehicles for you and your employees. Moreover, its agents are available in all 50 states and Washington, D.C.
Cons of state farm business insurance
Business insurance policyholders have limited online capabilities. One bad thing about the state farm business is that you can’t get a quote online.
What is commercial general liability?
Commercial general liability (CGL) is a type of insurance policy that provides coverage to a business for physical injury, personal injury, and property damage caused by the business’s operations, products, or injuries on the business’s premises. Commercial general liability is considered comprehensive business insurance, though it does not cover all risks a company may face.
Commercial general liability is a form of comprehensive insurance that offers coverage in case of damage or injury caused by a business’s operations or products or on its premises. There are two CGL policies: a claims-made policy that covers claims regardless of when the event took place and an occurrence policy where the event must occur during a set period. Companies can add other organizations or individuals they contract with to their commercial liability insurance policy as an “additional insured.”
Commercial general liability policies have distinct levels of coverage. A policy may include premises coverage, which protects the business from claims on the business’s physical location during regular business operations. It may also cover bodily injury and property damage resulting from a finished product or service done at another site. Excess liability coverage can be bought to cover claims that exceed the limit of the CGL policy. Some commercial general liability policies may have exclusions to what acts are covered. For example, a policy may not cover the expenses associated with a product recall.
When purchasing commercial general liability insurance, it is crucial for the business to differentiate between a claims-made policy and an occurrence policy. A claims-made policy delivers coverage for whenever a claim is made, regardless of when the claim event happened. An occurrence policy is different because it covers claims where the claim event occurred during the policy, even if it is expired.
In addition to commercial general liability policies, businesses may also buy policies that provide coverage for other business risks. For example, the company may purchase employment practices liability coverage to protect itself from claims associated with sexual harassment, wrongful termination, and discrimination. It may also purchase insurance to cover errors and omissions made in financial reporting statements and coverage for damages resulting from the actions of its directors and officers.
Examples of commercial general liability
Some examples that would acquire commercial general liability include the following:
- A customer enters your place of business where the floors have recently been cleaned and polished, so they are very slippery. The client slips on the floor and breaks a leg.
- One of your electrical company employees visits a home for an electrical wiring job and accidentally causes a fire in the client’s home.
- An advertisement you placed results in an individual claiming defamation.
Commercial general liability vs. premises liability coverage
Premises liability insurance, also known as primary liability, covers your business for accidents on your business property. Your business property or premises directs to the area where you work. It could include your office, your office parking lot, and the pathway leading up to your office. Some types of insurance premises liability are commonly mistaken for workers compensation insurance, commercial property insurance, and errors and omissions insurance, known as professional liability.
General liability coverage is a package that typically includes coverage for premises liability, product and completed operations liability, and personal injury. In other words, commercial general liability protects your business from many different types of claims resulting from injury or property damage suffered by a third party.
The significant difference between premises and general liability is that commercial general liability coverage that includes products and completed operations is a much more comprehensive insurance policy than a basic premises liability policy. However, premises liability is often less expensive than a CGL policy due to the much more limited coverage. It is essential to review your risk exposures and make sure that you buy the right insurance coverage for your operations.
Coverage becomes more complicated when part of your business property is shared with a landlord, such as an office in an office building. It is essential to check with your landlord to determine what parts of the property you are responsible for maintaining, including surrounding common areas. It is also important to decide what types of liability coverage are required in your leases, customer contracts, and other agreements, as they may need specific coverages or limits to be in place.
It is essential to discuss the unique insurance needs of your business and the specifics of your business coverage with a broker that is knowledgeable in your industry. Get in touch with a broker who can review your current insurance program and ensure that you have the necessary coverage for your business.
General liability insurance protects you and your business from all-around claims. You can benefit from general life insurance as it provides various facilities. The type of insurance for contractors protects you from third-party claims of bodily injury or property damage resulting from business activity. By following this article, you will thoroughly understand the importance of general liability insurance for businesses.