Why Does My Small Business Need General Business Liability Insurance?
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What does General Business Liability Insurance Cover?
General Liability Insurance is there to cover all of the assets of your LLC, your SMB, brand new business, company, or corporation. General Liability (GL) insurance policies protect business owners like you from having to pay for accidents that may occur on your business property, including but not limited to injuries to your employees, customer, or patrons.
If someone trips over a tire at your body shop and has medical bills to be paid, your general liability coverage could help address that risk, protecting you from having to pay that claim out of pocket. Assuming that the tire was left in an open area where it should not have been, by you or one of your employees, you as the business owner could be facing an expensive lawsuit. Your General Liability Insurance could help pay for your court costs and any settlement associated with the claim.
Now let’s assume you run a construction business, and one of your employees is driving a backhoe. There are obviously significant insurance risks associated with heavy duty construction equipment. Let’s say that your employee makes a mistake and accidentally runs into someone’s car/truck or the fence of the business next door. A general liability policy could step in and cover that property damage claim.
If your small business rents its location, a general liability insurance policy will also cover any damage to the rental property. So if you rent a building for your bakery and one of your employees accidentally starts a fire, you as the owner of the business have a responsibility and will be held liable for the significant risks and damage associated with the accident. Some GL insurance policies could prevent you from having to pay additional out of pocket costs to fix the damages and address the customer or employee needs.
Another way in which GL insurance policies are beneficial to a business would be coverage associated with false advertising complaints. Let’s pretend that you claim to be the fastest growing lawn care company in town, but your competitor can prove that their business is growing at a faster pace. A general liability insurance policy can cover you in the event of a lawsuit. In much the same way, your GL insurance can be applied to cases of slander, copyright infringement, etc...
How Much GL Insurance Coverage Do I Need?
How much general liability coverage you need depends greatly on what type of company you own. Some businesses are inherently riskier than other small businesses. From the examples listed above, one of our insurance agents would likely advise that the owner of the bakery may need less insurance coverage than the manager of the construction company, simply because there is a greater risk of injury and property damage in the construction industry.
It should be noted that laws associated with each state’s Department of Insurance vary widely state by state. If your business is located in a state where general liability insurance claims usually have large settlements in favor of the claimant, then your agent may determine that you need more insurance coverage. Or perhaps your business is less concerned about its risks because your state favors small business owners. Maybe a Business Owner’s Policy (BOP) is a better fit for your business. A Business Owner’s Policy (BOP) is usually considered a good, packaged deal: liability and property insurance at a low rate. A high-risk business or LLC that is very concerned with its liability requirements (examples might include heavy duty painters, electrical contractors, construction companies, or another industry requiring OSHA certified employees) the small business owner may want to buy an inexpensive umbrella insurance policy. An umbrella policy can increase the coverage limits on a business owner’s current general liability policy, which could protect your small business in case a very large lawsuit ends in favor of the claimant. Talk to an Infinity Insurance agent about the laws in your state by calling 1800-INFINITY. Visit our General Liability page here.
Whatever you decide, just think about what you can do to maintain a safe storefront and work environment, avoiding unnecessary risks. Lastly, be certain that the insurance coverage limits are high enough that your company would be covered in case of an expensive insurance claim or lawsuit. If you don’t feel comfortable with the coverage limits on your existing insurance policy, Infinity Insurance agents can help you add additional coverage or find another way to serve your insurance needs.
As soon as an accident occurs and before a claim is filed, you should let our agency know all of the details. One of our friendly agents will advise you, collect all of the general information that you can recall, and work on your behalf to resolve the issue quickly and efficiently.
The insurance claim payout process will work within the coverage limits you selected in the same way, as an example, that your auto insurance liability insurance with Infinity Insurance would be paid out. This can mean that, in certain cases where your coverage is lacking, you can be liable for expenses that exceed your limits. So choose the coverage that will best serve your needs and the needs of your small business. Give us a call at 1-800-INFINITY or visit us here to start the consultation process.