General liability insurance is also commonly referred to as “business liability insurance” or “commercial general liability insurance.” The policies offer protection if someone sues you for property damages and bodily injuries. Most insurers allow policyholders to choose between having standalone plans or bundling it with a business owner’s policy (BOP).
For businesses, you can purchase commercial general liability insurance to avoid the devastation that you may experience as a result of a liability claim.
What Does General Liability Insurance Cover?
If someone sues your business, general liability insurance can help cover your costs for legal fees, medical expenses, and lawsuit settlements.
The following are some scenarios coverage can help cover costs for:
- Third-party property damage. If one of your employees damages someone else’s property, general liability insurance can help cover the costs to repair or replace.
- Third-party bodily injury. If someone sues you because they are injured on your business property, general liability insurance can help cover the costs of the lawsuit and help pay for the medical bills.
- Reputational harm. If someone sues your business for slander from posting a comment, general liability insurance can help cover your legal costs.
- Advertising. If another business in your industry claims that your advertising looks too much like theirs, general liability can help cover your expenses to settle the claim.
- Employees’ work-related injuries or illnesses, which workers’ comp insurance can help cover
- Damage to your own business property, which commercial property insurance helps cover
Is General Liability Insurance Necessary?
The coverage can have a positive impact on the growth of your business. The following are some of the reasons you should consider having general liability insurance:
1. It Ensures the Smooth Running of Businesses
Other than compensation for repair and replacement costs, it ensures that your business continues running even after incidents such as damages, theft, or fire outbreaks. Every second in your firm matters. Therefore, in case of business interruption, the policy may cover costs such as rent and employee wages.
Also, you’ll not lose out when it comes to profitability. In some cases, your business premises may incur extreme damages. If that happens, general liability insurance can cater to the relocation costs as your workplace undergoes repairs.
2. You’ll Have Peace of Mind After Disasters
The policies offer coverage for buildings and their contents in the event of catastrophes. This means that if your business experiences disasters such as flooding or fire outbreaks, you’ll get compensation to keep it running.
3. You’ll Have Higher Chances of Closing Larger Contracts
Most organizations require you to have general liability insurance before bidding or when signing a contract. Your clients need reassurance that you can do the work you have been contracted for and that lawsuits from third parties won’t interfere with your work.
Also, general liability insurance reassures clients that you can offer compensation if you damage their property or injure other people as you do your work. Therefore, if you have valid and adequate coverage, the chances of closing more contracts will be much higher.
Does the Law Require General Liability Insurance?
There is no legal obligation for you to purchase the coverage. However, you need to understand its importance. Some of the situations that necessitate the purchasing of the policies by small businesses include when applying for professional licenses and signing contracts and office leases.
How Can You Reduce General Liability Risks?
Although the coverage offers protection against losses that you may incur due to liabilities, business owners should strive to reduce liability risks. Your claims history will affect the premiums for your insurance plan.
Therefore, if the risk levels are low, you’ll pay lower premiums. To lower the risks, you need to take measures such as adhering to legal requirements and consideration for the welfare of other stakeholders.
Finally, you’re now aware of what general liability is, why you need it, and how you can reduce your risk levels. When you start shopping for the policies, determine the amount of coverage you need. Also, review the coverage.