General liability insurance is a type of policy you may hear frequently when starting or running a business because it covers a lot of the common accidents that may occur on your business’ property.
Say someone comes into your shop and slips and falls. They break their ankle and decide to sue. If you’re a new start-up company, you may not have the funds to pay for a lawsuit—much less pay for medical compensation on top of that. Even experienced businesses may not have the necessary coffers to pay for legal fees.
Every company faces liability risks. Lawsuits are expensive and can send a business into debt in the blink of an eye. General liability protects businesses against lawsuits concerning bodily injury, advertising injury and property damage-related claims that arise out of normal workplace operations.
It covers:
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Bodily injury and property damage after an accident, as well as possible legal fees that may arise from it.
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Medical expenses (also known as medical payments coverage) in relation to bodily injury that occurs on the business’ property.
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Personal and advertising injury coverage, which includes legal expenses in relation to a lawsuit. It may also provide compensation to the injured person for lost earnings.
You may also expand this coverage with an umbrella policy, which fills in gaps when your other liability insurances reach their limit. For example, if a lawsuit will cost $1,500,000 but your general liability coverage only covers $1,000,000, an umbrella insurance policy will cover the standing $500,000.
Who Needs General Liability Insurance?
Any business with a physical address that faces the risk of a lawsuit related to any of the above should have general liability insurance. Industries that often face liability risks include restaurants, retail, medicine, law firms and contractors. While general liability insurance is not required by law, it’s critical to have a way to pay for lawsuits as they arise in a way that doesn’t drain your company’s assets.
The Cost of General Liability Insurance
Premiums for general liability insurance depend on the type and size of the business. On average, small businesses pay anywhere between $60-$170 a month. This is affordable in comparison to the millions a lawsuit could possibly cost out of pocket. Large businesses will obviously pay more for general liability insurance, as well as businesses that are more likely to face liability lawsuits.
When searching to insure your business, shop around, compare quotes and ask your insurance agent any questions you may have.