General Liability Insurance
What is General Liability Insurance?
Commercial General Liability Insurance is a very popular form of insurance that the vast majority of businesses carry. It is commonly referred to as CGL (Commercial General Liability) or GL (General Liability). This type of business insurance covers bodily injury to others, property damage, and personal and advertising injury.
General liability insurance claims can happen both on and off your business' premises. Furthermore, they can come from products you sell or produce, such as a customer injuring themselves from a faulty product.
Lastly, claims can arise from work that has already been completed. An example of this is a plumber being at-fault for improperly installing a fitting that results in water damage in a client's home.
A general liability insurance policy will cover the expenses associated with these losses that your business incurs, as well as legal defense costs if your business is sued.
These policies are available as a single coverage (monoline) or as a bundle with other coverages. When bundled with other coverages, it is then called either a Business Owners Policy (BOP), or a Commercial Package depending on the coverages.
Who Needs General Liability Insurance?
As a business, you may be legally responsible for the injuries that occur on your premises. People that are injured at your business location can sue you for damages, and without the proper coverage these expenses will have to be paid out of pocket.
Consequently, nearly every business should have general liability insurance. If your business does any of the following things, then it is important to have general liability insurance:
- Has a store front, showroom, or any physical location that clients and customers can visit. There is always a chance that someone can get hurt regardless of the apparent risk, and people that get hurt on your premises can sue you.
- If your business is going to another person's property to perform work or service. This will cover you if you accidently damage something during this time.
- Example: a carpenter goes into someone's home to fix a kitchen cabinet. They accidentally drop a nail in the kitchen while making the repair. After the carpenter has cleaned up and left, the homeowner steps on the nail and injures their foot. They sue the carpenter for damages, but luckily his General Liability policy covers the expenses incurred.
- If your business is in possession of another person's property. An example of this could be a laptop repair technician. If anything were to happen to the laptop during the time that you had custody of it, your General Liability Insurance will cover the damages.
- If your business advertises. This covers claims arising out of accidental trademark or copyright infringement. It also covers personal injury if someone were to claim libel or slander arising out of your advertisements.
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What Does Commercial General Liability Insurance Cover?
General Liability insurance covers a wide range of losses that your company may face. These coverages are in three different categories: bodily injury, property damage, and personal & advertising injury.
First we will discuss what each one means then look at different coverages that can be found in a general liability policy.
Bodily Injury
In insurance, bodily injury means physical injuries, sickness and disease. It also includes death. An example of bodily injury would be a shelf falling down in a store and hitting a customer, causing them physical harm.
A general liability insurance policy will also cover legal defense costs if the customer tries to sue, making it a valuable resource for all businesses.
Property Damage
Property damage means physical damage to tangible property. An example would be a contractor accidentally putting a hole in a wall while performing work on something else in a client's home.
Personal & Advertising Injury
Personal & advertising injury refers to intangible losses like pain and suffering or copyright infringement. Legal defense costs are also included if you are sued.
- Example: Business A advertises online that Business B violates health codes (which isn't true). In the following months, Business B notices a decline in sales and sues Business A for defamation, claiming that the false statements damaged their reputation which resulted in financial loss.
Types of Coverages
- Premises: Provides coverage for injuries of others on your premises, such as trip and fall hazards.
- keep in mind that this does not provide coverage for the building itself. For coverage on the building you need Commercial Property Insurance
- Example: a framer is cutting 2x4's out in the driveway of a house he is framing. He has tools and materials all over the driveway and into the sidewalk. A pedestrian is walking by and trips and falls on debris in the sidewalk, causing them injury. They sue the framer for damages.
- Operations: Provides coverage for issues or mistakes that may occur while completing the job.
- Example: a contractor working in a house accidentally hits a waterline and causes damage to a customers property. A GL policy would cover the expenses.
- Products: Provides coverage for issues or defects that may be in the products you make or sell.
- Example: a company assembles picture frames and supplies them to home furnishing stores. The company improperly assembles a picture frame that breaks and injures a person in the store, who then sues for damages.
- Completed Operations: A customer gets their brakes changed by a mechanic. The work is done improperly and causes the customer to crash. The person is injured from the brakes not being installed properly, and the mechanic is liable because they performed the work.
How Much Does General Liability Insurance Cost?
The cost of general liability insurance can vary drastically based on the type of business. If you are a small retail shop, you are typically going to be at a lower risk than a large contractor using heavy equipment.
Premiums for general liability policies usually start around $500 per year and go upward from there based on the business operations.
Companies are typically rated off of figures such as their annual payroll or their gross sales depending on the type of company and industry. Other factors, such as their claims history and physical location also play a role in how much companies will pay.
To get a better understanding of your rates, how they're put together, and ways to keep them down in the future, give us a call to see how we can assist you.
Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services. This website does not make any representations that coverage does or does not exist for any particular claim or loss, or type of claim or loss, under any policy. Whether coverage exists or does not exist for any particular claim or loss under any policy depends on the facts and circumstances involved in the claim or loss and all applicable policy wording.