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Understanding the Basics: What General Liability Insurance Is and Why Your Business Needs It

Understanding the Basics: What General Liability Insurance Is and Why Your Business Needs It

As a business owner or decision-maker, you may have heard of general liability insurance. However, you might not know details about it or why it can be vital to your company’s financial protection.

Learning about general liability insurance and purchasing coverage is essential for most companies. Without it, lawsuits over customer injuries, damage to their property, or product liability can result in a significant financial burden for your business. 

What Does General Liability Insurance for Business Cover?

General liability insurance covers a set of standard business risks that include:

  • Property damage or physical injuries that your business causes to someone outside your company 
  • So-called “advertising injuries,” like slander, libel, and copyright infringement 
  • Customer physical injuries at your place of business
  • Product liability, where something you sell harms people or property

Imagine that your business is required to pay costs related to these types of incidents, and you don’t have general liability insurance. In that case, the money must come from your company’s revenues or savings, and you have to absorb the hit to your bottom line. 

Sadly, it’s not uncommon for the large financial burden from a lawsuit to put an uninsured company out of business. 

What Does General Liability Insurance Cost?

Multiple factors affect your general liability insurance cost. One is the type of company you operate. Some businesses involve more risk than others, and elevated risk typically equates to a higher premium. Other characteristics affecting premiums can include your company’s: 

  • Location
  • Size
  • Years in business
  • Claims history

The specifics of your policy—like coverage limits (the maximum amount the insurer will pay for a covered claim) and deductibles (the amount you pay for a covered claim before your insurance kicks in)—will also affect your rate. However, it’s common for insurers to offer hundreds of thousands of dollars in coverage for as little as hundreds of dollars annually.  

Leading providers typically enable you to get an instant online quote for general liability insurance. Having the company information above handy is helpful when you seek a quote.  

What Are Some Common General Liability Insurance Claims?

Every company’s business risks are unique, but some of the general liability insurance claims insurers receive most often include things like: 

  • A customer at your store slips on a wet floor and breaks her arm. She needs surgery to repair the break, and her medical bills are approximately $25,000. She sues, and your business is found liable for failing to address the wet floor and required to pay her medical expenses. 
  • You complete a plumbing job incorrectly and a court finds you liable for $75,000 in damages caused by a leaking pipe.
  • A former client says they overheard you saying negative things about them to a mutual business contact and sues you for slander for $150,000 to cover lost sales due to damage to their reputation.
  • A phone holder you sell for use in cars is found to be defective, and a customer’s device is damaged when they use it. They sue you for the $1,200 repair expense. 

These are just a few examples of incidents that can be costly if you don’t have general liability insurance.What’s Involved in Purchasing General Liability Insurance for My Business?

Buying general liability insurance is simple, thanks to top insurers offering self-service capabilities on their websites. In addition to getting quotes on general liability and other coverages, you can purchase policies online and have them active as soon as the next day in most instances. 

So, there’s no reason not to have the general liability insurance your business needs—or the peace of mind that comes with knowing your business is protected should an expensive incident occur. 

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