As mentioned earlier, general liability insurance coverage helps cover claims caused by your business. It might either result in property damages or bodily injuries. General liability insurance is also known as commercial or business liability insurance.
A lot of business owners own this insurance that ultimately safeguards their companies against illicit claims. However, it must be kept in mind that it does not cover all kinds of risks involved in a business.
One can avail themselves of GLI as an individual policy or combined with other policies.
This comprehensive guide entails what is general liability insurance and why your company requires it. Further, you might discover what it consists of.
What’s Business or General Liability Insurance Coverage?
Under business liability insurance, you can get multiple coverage levels. The policy might consist of premises coverage which eventually safeguards the organization from claims occurring at the physical address of the business. Another inclusion is that it must take place during operational hours. It might include property damages or bodily injury coverages caused by a finished goods or service.
Commercial insurance agencies tend to sell liability coverage which might be purchased later to cover exceeding claims. Certain business liability policies might have exclusions that hinder the covered actions. For instance, the policy might not cover all the costs related to the product retail.
Considerations For Business Liability Insurance
While buying general liability insurance coverage, it is critical for the organization to differentiate between an occurrence and a claims-made policy. The claims-made policy offers coverage whenever a claim has been made, irrespective of the event. On the other hand, the occurrence policy might be different because it covers claims even if the policy has reached its expiration.
Additionally, with business liability policies, organizations might also buy policies that offer coverage if there are other business risks. For instance, the entity might buy employment practices liability coverage in order to secure itself from sexual harassment claims or wrongful termination.
Further, it might also buy insurance to cover omissions and errors in financial reporting statements. Even if there are damage coverages that result from the actions of officers and directors, it is caused by this insurance. Based on the business needs, an organization may be asked to name other people or companies as additional insured.
Liability Insurance Types You Can Purchase
Apart from general liability insurance, there are some other liability insurance types one must opt for. Here are some of the common ones:
1. Commercial Umbrella Insurance
This insurance coverage offers additional limits along with your existing liability policies, which ultimately helps you in paying out expensive claims.
2. Employment Practices Liability Insurance
The next type you will need, apart from the general liability insurance coverage, is employment practices insurance. It helps in covering your legal settlements and defense costs if an employee sues your organization for harassment.
3. Commercial Auto Insurance
It helps to protect both your organization and the workforce on the road when they are driving a vehicle for business purposes.
4. Management Liability Insurance
Management liability insurance assists in protecting your business officers and higher authorities from expensive claims.
What Happens When You Do Not Buy Coverage?
Have you ever thought how expensive it would be to opt for judgments, legal defense fees, settlements, and court charges? When someone claims against your organization, the following scenarios might happen:
- You might require legal counsel, which eventually costs more than $100 every hour.
- The maximum charges can easily exceed $80,000 when the claim reaches its ending point in court.
- Thirdly, you may be required to spend thousands of dollars irrespective of the status of the lawsuit.
Hence, if you do not buy general liability insurance coverage, you might have to pay everything from administrative costs to legal secretaries. And the bill you will receive will be unimaginable. If you purchase the right coverage at the right time, you can save yourself from such exceeding costs.
The Right Time To Get Yourself A Business Liability Insurance
Typically, the state laws do not ask you for general liability insurance. But, as said already, not having it might put your entity at a legal risk. Hence, it is of utmost importance to comprehend when you must buy business liability insurance if:
- You own an office, building, or store that is open to vendors, clients, and the public.
- You are working or handling client property.
- Create or advertise your business’ marketing materials.
- Make use of social media professionally or personally.
Let’s understand this in detail.
1. Buying Insurance When You Have Employees…
When you have employees, chances are you have a disability, workers’, and unemployment compensation insurance. The total employee strength might factor in when you are final quoting your insurance. And if you are considering laying off or adding certain employees, all you have to do is adjust the policies accordingly.
2. When You Want To Rent A Property…
Are you all set to open a shop in a desired location? Remember that most landlords need you to own both property insurance and general liability insurance coverage before approving the commercial lease.
3. In case You Want To Extend Your Professional Solutions…
You might have to update the information if you are moving to a large space or adding locations. Further, you might also have to adjust the coverage.
4. If you make use of vehicles…
Another circumstance when you will need insurance is when your organization owns or uses a vehicle. If the business owns a vehicle, it is important to have commercial auto insurance. In case your business does not own the vehicle, you might need non-owned or hired auto insurance.
5. Insurance is mandatory if you use special equipment…
There are various businesses that make use of heavy equipment, the loss of which is difficult to replace monetarily. So, if you make use of such equipment, it is important to have the right general liability insurance coverage in place. Don’t forget to expand it whenever you get new equipment.
Summing It Up
Your business is most likely to save itself from plenty of risks when you have general liability insurance coverage in place. Lawsuit risks encompass an organization every day, and guess what brings down this risk?
GL policies cover property damage claims, personal injury claims, and associated claims that can potentially sabotage your business’ reputation. Whether it is about paying settlement charges or attorney fees in the case of a lawsuit, commercial liability insurance certainly helps.
And its a wrap on this article. Do not forget to share it among your friends and associates if you found this helpful.
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