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General Liability Insurance
General liability insurance is essential for any business. It protects your company, your things, and your family. General Liability insurance policies are generally not required in most states to operate a standard business, but this may vary if you are an independent contractor, especially if you work in the construction industry.
I would analogize it to going out in the sun without sunscreen. You can do it, but at some point, you will get sunburn. No matter how careful you are, there is no way to protect yourself from all the things that can happen in the daily operation of a business.
If you are in a service business customers will not let you start on a project without it. Even if they do not ask for it is good to show at the time you make your estimate as your competitors may no have coverage and this should give you a leg up. Also if you lease a property where your business is located your landlord will usually require you to have General Liability Insurance. This policy offers you protection from losses if an accident should occur.
What Does it Cover?
General Liability Insurance covers businesses against claims made by their client and/or third parties for any damage that may have been caused by the business or their employees. Most businesses do not expose their clientele and third parties to significant risks. Furthermost business owners are conscientious about safety and their reputation. They usually will do anything within their power to protect their clients and third parties from suffering a loss. As this is all part of running a quality company.
No matter how responsible and diligent you are accidents happen. That is the reason why General Liability Insurance exists.
Here are 6 types of damage that you are covered by General Liability Insurance and some examples of when you might encounter these types of damages:
1. Bodily Injury
This protects against certain claims for loss due to bodily injury arising as a result of your business operations or products.
Example: A waiter in your restaurant is carrying a pot of hot coffee and accidentally spills it on a diner causing injuries.
2. Property Damage
This covers property damage to your client’s property or a third parties property.
One of your employees is installing a new sign at a location and a strong gust of wind blows the sign of the building damaging a car parked on the street.
3. Advertising Mistakes
Helps protect your business from claims if others allege you infringed on their copyrights when advertising goods, products, or services in your advertising campaigns, social media, or websites.
Example: You use a picture on the internet in one of your ads. If the picture is subject to copyright laws, your business can be sued even though you are of the opinion that you changed the image enough that you are protected under the fair use defense.
4. Harm to Reputation
Helps protect your business from some claims of false arrest, malicious prosecution, libel, slander, wrongful eviction, violation of the right of privacy, and more.
Example: You make some remarks in the local paper concerning a competitor. The competitor as takes this as libel They sue your business you have coverage.
5. Damage to premises rented to you
Helps protect your business against claims for damage that you have caused to the premises you have rented from a landlord.
Example: Someone in your office is taking a smoking break at throws a lit cigarette in the recycling bin causing the premises to burn down.
6. Medical payments
Helps cover medical costs if someone is injured on your business premises and needs medical treatment.
You own a small convenience store and a customer spills a bunch of ice by the fountain soda. Another patron walks in slips on the ice and breaks her arm.
What Is Not Covered
There are some classic situations that would not be protected by general liability insurance coverage and require more specialized insurance coverage.
1. Employee injuries
Workers’ compensation is the insurance you would need to protect your employees who are injured while working on the job or company-sponsored activities.
Example: You have a company function at the local Go-Kart track. Two of the salesmen get into a race and the other salesman cuts the other one off and he is injured. This is not covered under your General Liability Insurance but would be covered under Workers’ compensation.
2. Professional Mistakes
Errors and Omissions Insurance or Professional Liability Insurance.
Example: General Liability insurance coverage won’t cover a professional mistake, but professional liability will. You give your professional opinion that the ground is to build a house, six months later it turns out it was built on top of a swamp and has settled a foot.
3. Auto-related coverage
General Liability Insurance coverage does not protect you against auto accidents. You need to obtain a separate auto policy to cover the vehicles used in your business and for delivery even if employee’s use their own vehicles.
Intentional acts: General Liability Insurance does not cover damages or injuries resulting from intentional acts. EXAMPLE: An employee gets mad at customer and punches him in the face your business liability coverage would not cover the damages if they sue.
Referred to as the “workmanship or Warranty” exclusion.
Example: You paint a vehicle and a few months later the paint peels off because you used the wrong primer.
General Liability Insurance Cost
It is a little harder to calculate the exact cost of General Liability Insurance. There are common factors that insurance companies use to determine insurance costs. These are:
- Type of work being performed.
- Amount of revenue of the company.
- Number of employees.
- Amount of coverage requested.
- State where the company is located.
- Prior loss history(ie. Have there been insurance claims in the past 5 years).
These are the main factors in how Insurance companies determine your premium. However, at FarmerBrown.com at we want you to feel as though your liability insurance requirements are being met, so contact us today for a free quote that takes your unique needs into account. If you contact us we can go about completing your personalized insurance plan.
Everything you need to know about Contractors Insurance is here.
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