General Liability Insurance: Everything You Need to Know
Commercial General Liability or CGL insurance is considered the cornerstone of small business insurance. This coverage can be purchased as a standalone (mono-line) policy or included in a Commercial Package Policy or Business Owner’s Policy (BOP).
Often referred to as “slip and fall” insurance, commercial general liability insurance contains much more coverage to transfer your risks.
What does general liability insurance cover? The heart of the CGL insurance is the Bodily Injury (BI) and Property Damage (PD) coverage.
Business liability insurance coverage is triggered when the business is found to be legally liable for injuries or property damage to a third party, which is usually a customer.
For example, a lawn business is sued when a worker operating a lawnmower hits a rock that goes through the window of a vehicle.
Any business that sends employees into the business or home of a third party is at risk of something going wrong due to the actions of your employee.
But to make commercial general liability insurance even more simple, here is everything you need to know about this type of coverage.
What is General Liability Insurance?
Commercial general liability insurance covers costs associated with third-party accidents, property damage, and bodily injury. Without this type of coverage, your business may be found responsible for these costs. And if the costs are too high, they could seriously harm your business.
Commercial general liability is, therefore, a good idea as it can cover all these costs, including any resulting fees, up to the policy limit.
What is General Liability Insurance for LLC?
Small business owners often structure their companies as limited liability companies or LLCs. And while LLCs offer some protection for your personal assets, they don’t cover your company for the expenses that are associated with legal actions. That’s where general liability insurance comes in handy.
In a nutshell, general liability insurance protects your company’s assets if your business has been accused of harming another person or their property. General liability insurance also covers third-party claims for bodily injuries and property damages.
What Commercial General Liability Insurance Covers
Personal & Advertising Injury Liability
Typically a misunderstood coverage, the Personal Injury Liability coverage protects the business if a third party brings an action alleging libel, slander and false arrest. As Social Media advertising becomes more popular, this coverage has become a vitally important part of CGL insurance. The coverage is triggered by a claim from a third party for financial loss or damaged reputation resulting from your business’ advertising.
Premises liability provides coverage for damage caused by you or your business to premises rented by you.
If, for example, you rent additional space in a warehouse for storage and the warehouse owner claims that you or an employee caused property damage to the warehouse space, your CGL insurance will respond to claims for the alleged damage. This coverage is particularly important for contractors that perform services such as tile or carpet installation, roofing, building or remodeling of homes or buildings, and just about any other service to a building or dwelling.
This coverage protects the insured from workmanship claims after a project is completed. This is the coverage that General Contractors are most interested in for their subcontractors. If something goes wrong after a project is completed, the CGL will respond when a claim is filed against your business. This coverage is included in the CGL by most commercial insurance companies or can be endorsed onto the policy.
Typically purchased with limits of $5,000 to $50,000, Medical Payments (Med-Pay) can be a lifesaver for a small claim if a third party is injured while on the business’ property. Since liability does not have to be established, a third party can be reimbursed for minor injuries suffered while on your property without having to bring an action against your business.
For instance, if an accident occurs and someone gets a minor injury easily treated in the Emergency Room or Walk-In clinic, the insurance company will use the Med-Pay coverage to pay for damages up to the limits in the policy.
Depending on your type of business, many commercial insurance companies have a variety of coverages that can be added to your policy for an additional premium:
- Employment Practices Liability – This coverage is especially important for businesses with employees. The coverage is triggered for claims such as wrongful termination and sexual harassment.
- Contractors Equipment – This endorsement allows the contractor to purchase additional coverage for the equipment they use to perform their services. This is especially important for contractors who leave tools and equipment at the job site.
- Professional Liability – provides coverage for errors and omissions while performing professional services such as accounting, legal advice, hairdresser, real estate sales, and medical services.
For professionals that require state licensing, this coverage is usually mandatory.
- Hired Auto Liability – This coverage will extend the GL limits to a rented or hired vehicle such as rental cars and trucks.
To transfer the risks that come with owning or operating a business, Commercial General Liability should be carried without exception.
Commercial General Liability Insurance FAQs
How Much Does General Liability Insurance Cost?
The median price of general liability insurance is between $42 and $53 per month on average.
There are many factors that influence the commercial liability insurance cost. For example, if you do business in an area where the risk is bigger, you may be able to manage general liability insurance costs by adjusting your limits to reflect your specific needs. The price of the policy is also affected by the industry, your claims history, your policy size, and your business size.
But many business owners are interested in getting cheap general liability insurance. One of the ways to lower the costs of commercial liability insurance is to choose the appropriate limits. The higher your limit, the more expensive your policy will be. Another way to get cheaper insurance is to make sure you have the right general liability insurance coverage.
What Doesn’t General Liability Insurance Cover?
Typically, commercial general liability insurance doesn’t cover professional services, damage to your own property, workers’ compensation, automobiles while in business use, and expected or intentional injury or damage.
Does a General Liability Policy Cover Theft?
General liability business insurance likely won’t cover thefts as it usually only covers bodily injuries and property damages.
Does General Liability Insurance Cover Water Damage?
General liability insurance usually doesn’t cover water damage. However, water damage legal liability insurance covers businesses and individuals in case they cause unintentional water damage to someone else’s property damage.
Is General Liability Insurance Required by Law?
Commercial general liability insurance isn’t usually required by law. However, business owners are recommended to have it as there are some situations when a client or a licensing body might require this policy.
Is General Liability Insurance Tax Deductible?
Usually, commercial general liability insurance is tax-deductible as the IRS considers your policy payments as business expenses.
How Much General Liability Insurance Do I Need?
According to Insureon, most small businesses opt for standard coverage amounts of $1 million per occurrence.
Do I Need General Liability Insurance?
If your business deals with the public or you work at customers’ homes or offices, getting commercial liability insurance is something you should highly consider, as it can help cover third-party accidents, physical injuries, and property damage.
Are you still confused about general liability insurance, or do you need some help getting a quote for your business? Contact us today and get all the information you need fast and for free!
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