What is General Liability Insurance?
General liability insurance is the business liability insurance that every business needs. If you’re wondering what is liability insurance, we’ll explain it:
- Liability insurance means that it covers damages towards third parties only. It doesn’t cover anything that happens to you, your employees, or your own tools and equipment.
- General liability insurance means that it covers the basic risks that affect almost every business, no matter what your industry.
It’s easy to get confused between general liability insurance and other types of business insurance. That’s because some insurance companies refer to general liability insurance as commercial liability insurance, business liability insurance, limited liability insurance, or plain liability insurance. Other companies use the same words to mean professional liability insurance or medical malpractice insurance. If you’re buying business liability insurance, make sure that you’re getting the right type of liability insurance for your business.
General liability business insurance covers your business in case of many types
of accidents that happen to other people during your work. It includes accidents that cause physical harm or property damage to others, and copyright infringement. It also covers fire damage to rented premises, when the fire was unintentional or you were liable for it.
For example, you put your toolbox down on the sidewalk for a few moments while you’re loading your van in the morning. An early morning jogger doesn’t see it there and falls over it, breaking their nose. They can sue you for their medical costs. That’s something that your general business liability insurance would cover.
Or imagine that your photography tripods leave marks on the dancefloor at a wedding venue. The venue can make you pay for the cost of cleaning and repolishing the floor. That’s also covered by general liability insurance for small business.
There are so many ways that you’ll be happy to have general liability insurance coverage. It’s the basic type of liability insurance for business. If you run a small business, getting a liability insurance quote is the place to start.
What’s so Important about General Liability Coverage?
You might still be asking yourself, ‘Why do I need general liability insurance for business? If I’m careful, can I manage without buying liability business insurance?
Commercial general liability insurance is very important for every small business. Here’s what makes small business general liability insurance so important.
No matter how careful you are, accidents can happen. They might not even be your fault. For example, a client comes into your office without looking where they are going. They trip over the step, and break their ankle. You don’t want to have to spend your working capital paying their medical costs.
When you have general liability small business insurance, it covers you for lawsuits or other people’s medical costs. Premiums for business liability insurance cost less than paying for the results of an accident.
Business liability insurance coverage shows that your business is reliable, and trustworthy. That’s what your clients want. They want to see that you will take responsibility for your mistakes. Your commercial general liability insurance policy is proof that you planned ahead.
If someone has a choice between your business, which has comprehensive general liability insurance, and another business that doesn’t have insurance, they will choose your business every time.
Some states and towns only give you a business permit if you have valid general liability insurance for your small business. Running a small business without general liability business insurance could be illegal. If your business is certified or accredited by a professional body, they might require you to keep up your general liability insurance in order to keep your license active. Your landlord could also insist on seeing your general liability insurance certificate, because it protects against accidental fire damage to rented premises.
Keeping your small business general liability insurance up to date means that you won’t have to pay a fine. You’ll also pick up more clients who only work with a legal business.
It Lets you Focus on Growing Your Business
When you have general liability insurance, it gives you peace of mind. You won’t have to worry about what you would do if a client trips and falls on your premises, or how you would pay for a new vase if you accidentally smash one in a client’s house.
Having business liability insurance means that instead of feeling nervous about ‘what if,’ you can concentrate on making your business even bigger. You can spend your money on growing your business, and put all your efforts into getting more clients. You’ll be free to find new ways to get more work.
What Does General Liability Insurance Actually Cover?
Your biggest question is probably “What does liability insurance cover?” The short answer is that liability insurance covers the most common types of accidents and mistakes for business. Now let’s discuss general liability coverages in more detail.
Liability insurance protects you against 3 main situations: bodily injury, personal and advertising injury, and property damage. These are the most important types of liability insurance.
General commercial liability insurance covers you if you cause physical harm to a third party. Liability insurance also protects you against lawsuits from someone who was injured on your premises, even if it wasn’t because of you. It can cover you for their medical costs, for income that they lost while they were recovering from the injury, and for pain and suffering because of the accident. Here are some examples.
Loss of income
A client is visiting your office to consult with you about their tax return. A heavy paperweight rolls off your desk and falls onto their foot, breaking 2 of their toes. They have to spend the next 2 weeks on crutches, which means they have to take unpaid leave from their work as a chef in a busy restaurant. They demand that you pay their medical costs, and for their loss of income because of the accident.
Pain and suffering
You’re standing at the top of a ladder doing electrical work when you drop a handful of sharp nails. Before you can get down and pick them up, your client’s toddler runs across the floor barefoot. Your client has to take the child to hospital to get them a tetanus shot. They also don’t get any sleep for the next couple of nights, because their child keeps waking up from the pain. Your client sues you for their child’s pain and suffering as well as their medical costs.
Personal and Advertising Injury
Your liability insurance policy also covers personal and advertising injury claims. Although personal injury sounds like it covers physical harm, it’s not the same. Business liability insurance coverage protects you against non physical damage too.
Personal and advertising injury claims on your commercial general liability coverage usually include breaching someone’s privacy, copyright or advertising infringement, and defamation of character. It’s easiest to explain personal and advertising injury liability insurance coverage with some examples.
You do a beautiful job reinstalling a client’s old bathroom. You take some pictures of the new bathroom and use them on your website as an example of your work. Your client sees the photos and gets very upset. They sue you for breaching their privacy by using photos of their home without permission.
Your flyers about your personal trainer business refer to you as ‘the Rock.’ The real Dwayne ‘the Rock’ Johnson sees them. His agent sues you for copyright infringement, because you used his signature nickname.
Your new marketing campaign promises that your DJ business plays the latest top tracks, unlike some other DJs. Your biggest competitor takes it personally. They sue you for defamation of character, because you made people think that they play old music.
Your general liability insurance policy covers you for damage that you cause to someone’s property. The best general liability insurance for small business includes both big and small accidents. Liability insurance for a business needs to cover everything, from a small scratch on the paintwork to huge flood damage.
Here are some examples:
You’re mowing a client’s lawn, and go a little too far at the end of a row. You end up damaging their heirloom tomatoes. The client insists that you pay for the cost of ordering new seedlings from a specialty tomato grower on the other side of the country.
Your beautician assistant is giving a client a manicure when they drop the bottle of nail polish. It smashes on the floor, splashing scarlet nail polish all over the client’s expensive Hermes handbag. The client sues your salon to pay for a replacement bag.
You park your van in an office parking lot. As you’re taking out your big floor polisher, it slips and scratches the paintwork on the CEO’s shiny red BMW. You have to pay for the cost of getting the entire car repainted at a certified dealer.
Who Does General Liability Insurance Cover?
You can buy liability insurance for every kind of business. That includes liability insurance for the self-employed, LLC liability insurance, and corporation liability insurance coverage. General liability insurance for your business covers you for damage caused by you – the business owner – your spouse or partner, and your employees.
What Else Does General Liability Insurance Cover?
At AIIA Business Insurance, our small business general liability insurance policy covers accidental fire damage to rented premises, or fire damage that you are liable for. Imagine that faulty wiring in your office fridge sparks an electrical fire in your office. The fire service comes quickly and puts out the fire, but there’s still fire damage to the walls and ceilings that will cost several thousand dollars to repair. That’s covered by your general liability for business insurance.
Our liability coverage insurance also includes product liability insurance. This covers damage caused by products that you sell to your clients. For example, your ecommerce business sells massage oils online. If a client has an allergic reaction to the oil they bought, you could have to pay for their medical costs. The product liability insurance part of your business general liability insurance covers those costs.
Someone trips over your tools and breaks their leg.
Someone sues you for improper use of images in your advertising.
An employee bad-mouths a client on Facebook and the client sues you.
You drop heavy duty equipment inside your client´s house and damage their hardwood floor.
Someone gets injured at your work site and asks you to pay for medical expenses instead of suing you.
You need an attorney to defend against a lawsuit even though you did nothing wrong.
What Isn’t Covered by a General Liability Policy?
Your general liability insurance policy covers many different situations, but it doesn’t cover everything. You might need to buy other types of liability insurance, depending on your small business.
- You’re fixing the hinges on your client’s cabinet doors, but you turn the screws too hard. The hinge presses into the door and cracks it, leaving you with no option but to buy a replacement cupboard door.
Calculating the Average Cost for General Liability Insurance
It’s difficult to answer the question ‘How much is general liability insurance?’. Every small business is different, so general liability insurance cost is different for each one. Your general liability insurance quote depends on a few issues:
- What is your industry? The best liability insurance companies like Next Insurance charge you according to the risks of your industry. An accountant shouldn’t have to pay the same general liability insurance coverage cost as a general contractor.
- What is the maximum amount of coverage that you need? The answer to ‘How much does liability insurance cost?’ depends on your aggregate limit. This is the maximum amount of insurance that you could claim from your general liability insurance policy. The higher your total coverage limit, the higher your small business liability insurance costs.
- Your deductible. If you have a larger deductible, you’ll pay less for general liability insurance for your small business. At Next Insurance, we don’t charge a deductible for our general liability insurance policies, so you won’t need to worry about it.