If you’re a small business owner, you’re probably all too aware of the many unpredictable occurrences that could creep up and disrupt your daily operations or harm your bottom line at any moment. Whether it be an employee or customer injured on your property, damage to your facilities, or harm to your business’s reputation, it’s important to identify potential areas of concern and plan for the unexpected so you don’t find yourself in deep water if trouble does arise.
So, how do you do that? One great way to protect yourself and your business is to invest in general liability insurance. What does general liability cover? Read on to learn everything you need to know to make an informed decision for your company and employees.
What is general liability insurance?
Also referred to as “business liability insurance” or “commercial general liability insurance” by some providers, this type of insurance covers a wide range of incidents that business owners in a variety of fields are most likely to face in their day-to-day business operations. The specific claims covered will look different depending on the type of business being insured, but they generally work to protect businesses against claims of bodily injury sustained by customers, as well as damage done to property, product liability, and advertising injuries, including infringement of libel or copyright laws.
What does general liability cover?
Although it may seem like a just another expense, especially for individuals who are still working to get their businesses off the ground, protecting yourself and those you work with by investing in general liability insurance can save you money, time, and heartache in the long run. Depending on your circumstances, it may even keep your business from falling into bankruptcy. To better understand the coverage of general liability insurance, let’s take a closer look at some examples of common claims:
- Property damage: In the event that your business is responsible for accidentally damaging third-party property, general liability insurance can help cover the cost of replacement or repair. For example, if you’re a contractor working on site at a client’s home and back into their mailbox, your policy would cover expenses related to remedying the damage.
- Customer injury: If someone comes to your office, warehouse, or site of work and is injured in any way, your general liability insurance policy would protect you from paying for medical costs out of pocket. Medical bills can add up quickly, and in some instances lawsuits for injuries sustained by a customer aren’t brought on until months after the fact. Your insurance provider will help cover costs and legal bills related to incidents that arise.
- Advertising injury: Sometimes a business owner is sued because another company or an individual feel they’ve infringed on a copyright, slandered their brand, or invaded their privacy. For example, if an employee at your landscaping company take to social media and described a competing company’s inferior services, they may come after you for making claims resulting in their loss of business—general liability insurance would help you cover legal expenses.
- Product liability: If your business manufactures, distributes, or sells products instead of providing services, general liability insurance would protect you against lawsuits pertaining to harm brought on by said products. For example, if you sell a product that causes a customer to become injured, they could sue you for medical bills or the wages lost due to time they weren’t able to work. Your policy would help cover any expenses you incur.
What types of businesses need general liability insurance?
General liability insurance is recommended for most small companies, especially those that have an office or commercial space, work face to face with clients in any capacity, or employ others who may be seen as representatives of your brand. Businesses that should definitely consider general liability insurance include:
- General and artisan contractors: Since you work in other people’s homes, making sure you’re well protected against damage and accidental injury is essential. Accidents happen—even to the most careful professionals.
- Real estate agencies: Conducting work between their public offices and others’ homes, it’s essential that real estate agencies are also prepared to defend their businesses in the event of injury or accidental property damage.
- Marketing firms: Since marketing firms are working to promote other companies and brands, they hold great sway in public opinion—and could potentially cause significant harm to a company if they say the wrong thing or misrepresent them.
Consider the type of work you do and how you interact with clients. How likely is it that your space, services, employees, or products could inadvertently cause harm? While injury, defamation, and damage are never the intent of a business, being prepared for accidents will save you time and money in the event that you face a lawsuit down the road. Covering legal fees accrued defending your business out of pocket could set you back or even bankrupt your business.
Are there risks involved in not having general liability insurance?
Certainly. No matter what kind of business you run, there’s a wide array of ways you could innocently and unintentionally cause hard to your clients or customers, and the cost of defending yourself out of pocket in the court of law is enough to put even well-established businesses in serious debt.
Depending on the kind of work you do, not having general liability may also lose you potential clients. In some fields, clients will only do work with companies that are enrolled in this type of insurance policy.
How do I secure general liability insurance coverage?
Before you start shopping around for a policy, you’ll want to make sure you have the following information ready:
- General information: This includes contact information, a description of the work your business does, and how many people you employ.
- Location information: Where is your business located? Do you own or rent the property, and how long have you been there? You may need to supply documents that illustrate this.
- Proof of ownership and projected revenue: Gather documents that show how long you’ve owned your company and put together a projection of revenue for the upcoming fiscal year.
Once you’ve done this, reach out to a few insurance providers to discuss your options and get quotes. Depending on your business and the insurance provider, they will make a recommendation for which policy is best for you. Once you have information from a few providers, you’ll be able to evaluate the options and decide which best suits your needs.
The choice to enroll in general liability insurance is ultimately yours, but considering what general liability covers and arming yourself with this foundational protection is a great investment for small business owners in any industry.