Why Do You Need General Liability Insurance?
You’ve worked hard on your business. You saved up, planned, calculated and are now ready to take your enterprise to the next level. Your staff is dedicated, and your warehouses or stores are looking fantastic. One of your employees comes up with an amazing marketing plan and you put it into action.
But then a rival business accuses you of stealing their advertising plan. Suddenly your business is caught up in legal expenses and you must dig from your company’s savings to pay for a lawyer. The longer the trial takes, the more money you’ll have to spend. With general liability insurance, the insurance company will help pay for those legal fees.
Another example is if a visitor—say a shareholder—visits your warehouse and is injured. In some cases, general liability can help pay for their medical expenses as well as protect your business against a lawsuit. There are some cases where you may need professional liability, however.
What Does General Liability Insurance Cover?
A general liability insurance policy typically covers:
- Bodily Injury
- Property Damage
- Personal Injury
- Advertising Injury
The main purpose of general liability insurance is to protect your business against claims. Personal or advertising injury includes slander, libel, copyright infringement and more. Bodily injuries may include mental and emotional distress.
What Does General Liability Insurance NOT Cover?
There are some instances where general liability won’t cover a business. This includes:
- Employee Injuries. If an employee is injured on the job, you’ll need to handle their injuries and possible claims that arise.
- False Advertising. If your business advertises that you sell a certain product, but you don’t, any claims that arise from this false advertising won’t be covered.
- Professional Negligence. General liability only covers incidents that don’t arise from professional negligence. If food from your restaurant has spoiled and makes a customer sick, your general liability insurance likely won’t cover you. That’s when you need professional liability insurance.
What is the Difference Between General Liability and Professional Liability?
While both insurances deal with legal fees that come with claims, both are vastly different. General liability handles accidents due to non-professional negligence. In other words, injury or damage as a result of daily business practices. Professional liability deals directly with accidents involving negligence on behalf of a business. For example, say you’re a home inspector and you fail to notice a leaky pipe. The homeowner moves in, discovers the leaky pipe and sues you because they now must pay to fix the leaky pipe. This is a case where professional liability steps in.
How Much Does General Liability Insurance Cost?
In the US, the average cost for general liability insurance is around $741 a year, or $62 a month. This rate changes depending on the size of the company, amount of coverage, the industry and your location. Industries that are considered at higher risk, such as wholesalers and retailers, tend to pay more since they’re more likely to file a claim. Small businesses can pay as low as $17 a month for general liability insurance.
Can You Buy Stand Alone General Liability Insurance?
You can purchase general liability insurance on its own. It can be more cost-effective for your business to bundle it with other insurance policies, however. A business owners’ policy (BOP) combines liability and property insurance coverages. General liability on its own doesn’t cover damage done to your company property or your vehicles.
If you want to make sure your company’s covered, also consider investing in these additional coverages.