General liability insurance can be a difficult concept to grasp for new business owners. You may not know what it is or whether you need it. The fact is, liability insurance is a crucial component of any business insurance plan. It's an essential policy that ensures your business's investment and profitability are not threatened due to bodily injury or property damage. This guide will help you understand what commercial general liability insurance covers and how it can protect your business.
What Does General Liability Insurance Cover?
Commercial general liability covers costly bodily injury and personal injury claims that can arise during normal business operations. It differs from professional liability insurance in that it covers physical risks rather than abstract risks like errors and omissions. The following are a few of the areas of coverage offered by general liability:
Third-Party Bodily Injury
If a customer becomes injured after slipping and falling on your business’s property, you can be on the receiving end of a lawsuit. With general liability insurance, your coverage includes bodily injury, which helps you pay for their medical bills and any legal costs. 
Third-Party Property Damage
If you perform work on others’ properties, you face the risk of causing property damage. Property damage liability coverage can assist with the costs of replacement or repair if you or one of your team members damages someone else’s belongings while on the job.
Reputational Harm
If your business or one of your employees makes false claims about a third party—whether it be a social media post or simply a comment made in passing—it can result in reputational harm. You'll benefit from general liability coverage if the third party sues you for libel or slander.
Advertising Injury
If you mistakenly commit copyright infringement, such as using a photographer’s photos in your ads without their permission, your legal fees or settlement will be covered in the event of any ensuing lawsuits.
What Doesn’t General Liability Insurance Cover?
You should also understand that commercial general liability insurance doesn’t cover every claim. You’ll have to rely on other policies to cover the following risks:
- Work-Related Injuries: If an employee suffers an injury or illness as a result of their role, workers’ compensation can help cover their medical expenses, ongoing care, and lost wages.
- Damage to Owned Property: Commercial property insurance will step in to cover any damage that occurs to your business’s property.
- Errors in Professional Services: If you make any clerical errors, poor installations, or tax filing errors, professional liability insurance will help cover the losses.
Fortunately, many business policies can cover any gaps in your insurance, and speaking with your insurance agent can ensure you’re completely covered.
Why Does a Business Require General Liability Insurance?
Liability claims in business are fairly common, and since they often involve legal repercussions or medical expenses, they can get expensive. A study by the U.S. Small Business Administration reported that 36 to 53 percent of small businesses are sued each year. While not all businesses share the same risks, something as simple as a slip and fall can bankrupt a company. A slip and fall can cost from $30,000 to $40,000, if it evolves into a lawsuit, that cost can be doubled or more. That's a lot for a small business to pay out of pocket.
When Should You Invest in General Liability Insurance?
A commercial general liability policy is essential for businesses of all sizes. If you own a store, office, or building open to the public or clients, it’s crucial you invest in this policy, it’s valuable even for those who work from home. If you use social media professionally or are in charge of generating marketing materials for businesses, general liability insurance will cover any reputational damage you may commit against a third party. As soon as you decide to invest in your own business, you should contact an agent about liability coverage.
What Are the Other Types of Liability Insurance?
Aside from general liability insurance, there are additional liability policies that can protect your business. Here are some you should consider:
- Employment Practices Liability Insurance: This policy covers any legal defense costs, settlements, or judgments if a current or former employee sues your company for discrimination, harassment, or wrongful termination.
- Commercial Umbrella Insurance: With umbrella coverage, you can purchase additional limits to improve your existing liability policies, making you more likely to be fully covered for expensive claims.
- Directors and Officers Liability Insurance: This provides coverage for your company’s executives. Director's and Officer's liability covers the high-profile roles most likely to be targeted by lawsuits.
- Commercial Auto Insurance: While this covers more than just liability, it’s vital to have if you drive a vehicle as part of your business. On top of covering your drivers and vehicles, this policy covers damages caused to third parties.
- Hired and Non-Owned Auto Insurance: This policy covers commercial auto liability damage, such as settlements and legal fees, resulting from an auto accident committed by a vehicle that you hire, rent, or borrow.
Get in touch with an independent insurance agent to discuss if these policies are the right fit for your business.
Understanding the ins and outs of commercial general liability insurance helps you make the best decisions to protect your business. No matter your company’s risks, you can surely benefit from the wide range of coverage offered by this vital policy. World Insurance Associates can customize your business insurance policies and get you the right amount of coverage for your needs—reach out today.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.