General liability insurance helps protect your assets by providing a first line of defense against a variety of claims for alleged negligence or wrongdoing. In today’s lawsuit-happy society, litigation can wreak havoc with any business — including yours. By covering the cost of defending or settling these claims, a business general liability insurance policy can help you keep your business in business.
What does General Liability Insurance policy cover?
- Bodily injury
This covers injury arising from accidents that result for your business operations, arising from your premises or for completed operations. This includes injury one gets from the product your sell or the service you provide, as well as accidents inside your business office or place of operations that result in bodily injury. This can also cover physical harm caused by a completed project. For instance, you are a contractor that installed a set of kitchen cabinets to a client. One of the hinges was loose and a piece of wood fell into the customer’s head, causing injury.
- Advertising injury
An advertising injury is an injury to a third-party brought about by the business’ advertising its goods and services. This can occur by copyright or trademark infringement. It can also occur as a claim of libel, slander, or invasion of privacy. Typically, a competitor of your business complains that an act, advertisement, practice, or comment you or your staff has made has damaged their business. For example, in comparing products, your advertisement uses a photo of your competitor’s product and makes a false claim about the competitor’s product. The competitor sues your business for a variety of claims: defamation, trademark infringement, etc. Your commercial policy would provide a defense and indemnity for this kind of claim.
- Personal Injury
Damage to the reputation or rights of a person or business due to slander, libel, copyright infringement, invasion or privacy, false arrest, wrongful eviction, etc.
- Property Damage
The last of the four main types of claims covered by general liability insurance is property damage. Your commercial GLI covers damage caused to third parties and their property by negligence on the part of you or your agents.
Again, property damage claims are a relatively common occurrence for most types of businesses that have a high level of exposure to the public. Something as innocent as a fender bender between two customers in your parking lot can potentially result in a property damage claim against your business, so this is definitely another area where you are better off carrying coverage regardless of your business’ location, industry, etc.
What General Liability Insurance doesn’t Cover?
- Employee injuries
Workers compensation (for injuries to employees while on the job)
- Pollution
Environmental liability insurance (for lawsuits related to pollution such as a gas tank dripping gasoline)
- Professional Mistakes
General liability insurance doesn’t include coverage for professional liability insurance claims. If you’re in the business of providing professional services to a client (such as a veterinarian, accountant or business consultant) you need professional liability insurance. This insurance covers professional mishaps that may occur as you offer your opinion, solution, service or recommendations in the course of business.
- Auto related coverage
Operating autos or trucks in your business (Business Auto Policy);
- Personally identifiable information
Your general liability insurance policy doesn’t cover your failure to protect any personally identifiable information that is in your care, custody or control.
- Punitive damages
Though there can be exceptions, general business liability policies rarely pay for punitive damages resulting from a lawsuit.
- War
- Acts of terrorism
Each insurer may include additional exclusions. Supplemental insurance policies are available to cover such exclusions. After reviewing the standard insurance policy, draft a list of additional insurance needs and purchase additional policies accordingly.
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