We hear questions from our commercial clients concerning general liability insurance, namely what is it, why do I need it, what does it cover, and does it duplicate other coverage. The following attempts to answer these questions about general liability insurance.
- What does general liability insurance cover? General liability insurance, which is generally part of a commercial package policy, covers you for claims of bodily injury or property damage. Legal defense, non-monetary losses suffered by the injured party, compensatory damages, and punitive damages are generally covered. Basic coverages include:
- Bodily injury and property damage liability: if someone is injured on your premises or if someone’s property is damaged on your premises and caused by you or your employees.
- Personal and advertising injury liability: If you or your employees commit libel, slander, disparagement, or advertising infringement in the course of your business.
- Medical expenses: Pays medical bills if someone is injured on your premises regardless of fault.
- Premises and operations liability: Claims for bodily injury or property damage arising out of your business operations.
- Fire legal liability: Protects you as a tenant if you cause damage to a property that you rent, such as by fire or other covered loss.
- Why do I need general liability insurance coverage? General liability insurance is relatively inexpensive. It only takes one incident on your property to stress your financial security and your emotional well-being. You may keep a well-appointed, neat, efficient office but, accidents still happen and people will expect you to compensate them.
If you are sued for a liability claim, the cost of defense could be as high as a potential judgment. General liability insurance pays for defense and also covers any settlement award, up to the limits of liability specified by the policy.
Many companies have contracts that require them to carry general liability insurance. Banks also require general liability coverage in order to receive a loan. - How much general liability coverage do I need? This is the most common question we are asked and, of course, the answer is somewhat ambiguous. You should consider the litigious environment in your locale, your exposed assets, the type of business you are in, and the perceived risk associated with it. We like to say that no one regretted having too much insurance at the time of a loss. For a small business or practice with less risk, the general liability coverage is usually packaged with the property insurance in a Business Owner’s Policy, or BOP. You may also purchase coverage separately.
- What if the general liability coverage on my policy is not enough? We encourage our clients to also purchase an excess liability policy, or umbrella policy, to give them higher liability limits for a nominal cost. If they are sued for a large amount, the underlying general liability policy will pay first and then the umbrella coverage will kick in. The umbrella coverage only goes over the general liability policy. It does not apply to professional liability insurance.
General liability exposures are excluded under your professional liability policy.
For a more detailed explanation of general liability coverage, or for a quote, kindly call us at 1-800-272-6055 or 561-276-6055.
