What Is General Liability Insurance?
Also known as business liability insurance or commercial general liability insurance, general liability business insurance is the most basic form of coverage that a business needs. It is the insurance policy that covers your business against all types of accidents. These could include cases where a customer gets hurt when they’re in your workshop or if you drop a piece of heavy equipment and make a hole in a customer’s floor, or in the floor of a space you rent for your business. These are accidents that can break the bank for most entrepreneurs and general liability insurance coverage is the safety net that allows you to focus on doing great work and growing your business.
What’s So Important about General Liability Coverage?
There are a few reasons that general liability insurance is essential to both protecting and growing your business. Here are some of the main ones:
Accidents Cost Money
Here are a couple of real claims we’ve covered that you could imagine happening to you: one customer was fixing a roof and a tool fell to the ground, going right through the window of his customer’s car. Another was training a client in a gym when the client lost her balance and fell backwards into a mirror. Medical bills and repairs to cars are both expensive and it will be up to you to pay for them, unless you have a general liability insurance policy.
Lawsuits Cost Even More Money
The client’s injury probably wasn’t our customer’s fault but arguing your case in court if you are sued can still be a costly endeavor. If a customer, or a customer’s insurance company, wants you to pay for bodily injury or property damage, having an insurance policy that can take care of it is often easier than fighting it out in court.
Customers Want Protection Too
If something happens, your clients need to know they won’t be left in the lurch, paying for car damage, or for replacement of a mirror. If you have general liability insurance, your clients can feel safe knowing that in the case of an accident they won’t have to spend their own money or affect their own insurance premiums. General liability claims can go into hundreds of thousands of dollars, and clients want reassurance that they won’t need to pay those sort of sums.
People Want to Work with Professionals
Even if you personally believe you and your business are immune to accidents, insurance can still help you attract new business. Your ability to send a Certificate of Insurance demonstrates to potential new customers that you’re an organized, responsible professional running a serious business. They know they can trust you to keep an eye on all the details of their projects and not to cut corners on important costs such as insurance.
What Does General Liability Insurance Actually Cover?
Bodily injury, sometimes referred to as, “slip-and-fall insurance” is the portion of the commercial general liability policy that’s going to cover claims for physical injury to a third party. Whether it’s a customer tripping in your salon, your dropping something heavy on a client’s foot, or even someone passing by falling on an extension cord you set-up, this addresses any scenario where you might be liable, or legally responsible, for bodily injury. It often includes a range of expenses associated with the injury such as medical bills, loss of income, and pain & suffering.
Although the name can lead you to believe otherwise, personal injury doesn’t usually refer to physical wounds. This part of a general liability policy may cover you if you’ve accidentally committed copyright infringement, defamation of character, or advertising infringement, or caused some other form of non-tangible harm. These kinds of claims can be for a lot of money and often come with court costs and damage to your reputation.
This section of your policy is what lets you get the job done without spending all your time and energy wrapping everything near you in bubble wrap. This is particularly relevant if you work in your clients’ space or with their property. Property damage includes anything from a broken vase or simple scratch on a wood floor to small electrical fires or water damage. Just make sure that your general liability coverage actually includes what you need: stay away from plumbers’ insurance that excludes water damage.
What Isn’t Covered by a General Liability Policy?
Most general liability business insurance policies cover damage or injury to other people but usually won’t help if it’s your body, reputation, or property that’s been harmed. For example, if you have employees then it’s likely you’ll need to get worker’s compensation insurance (more commonly known as “worker’s comp”). This covers your employees’ medical bills and expenses in case of injury on the job. You can also buy a policy to cover your own injury but it’s not usually mandated by law.
You may also want to insure your business space, equipment, and vehicles since damage to any of those could stop you from operating. If you sell a product, you may want to consider product insurance which covers any damage caused by something you sold. If you provide a service, professional liability coverage will take care of any claims that you did your job incorrectly. While all of these are important to consider, they aren’t as basic as general liability insurance and aren’t included in most general liability policies.
Calculating the Average Cost for General Liability Insurance
The average cost of general liability insurance varies widely depending on the particular field. A contracting business that does big jobs using dangerous equipment will have to spend a lot more for a comprehensive policy than a freelancer who sits in front of a computer in their own home or office. This means that most insurance companies offer general liability insurance for small businesses that range anywhere from one or two hundred dollars a year to over a thousand. The only way to know what general liability insurance really will cost is to get a quote that is tailored to your business.