Who Needs It?
Almost anyone who runs a business should have an active general liability policy. It protects your business from potentially destructive loss in a claim. You should especially consider business liability insurance if you:
- have a location that is open to the public (restaurants, retail locations, etc.).
- interact with people/clients at your location or on a job site.
- have access to client equipment (computers, construction equipment, vehicles, etc.).
- sell products to or perform services for customers.
- advertise, market or represent your client or their business.
- are required by a contract to hold a liability insurance policy.
General liability insurance is very broad. Let’s go through some of the things that are covered.
Your business will be protected if you or one of your employees causes damage to another person or company’s property. The expenses to repair or replace the damage property will be covered by your insurance policy.
Do note that general liability covers damage only to third-party property, not your own property. To protect your own property, you could consider commercial property insurance.
Commercial liability policies will also protect you in the event that a third party suffers a bodily injury on your property or as a result of your business operations.
Bodily injury could be something that just happens to take place on your property, like someone tripping on the edge of a rug in your store. It can also be something that is a result of your work. For example, if you are an electrician and you have open wires on a site during your work and your client touches them during a walkthrough and is injured, you would be responsible but you would also be covered by your general liability policy. This is very common and is the reason that general liability insurance is especially critical for tradesmen.
Once again, note that you and your employees are not covered by this policy. To protect yourself against claims by employees, you will need to provide workers’ compensation.
While bodily injury and property damage coverage deals with accidents, personal injury (as well as the following section on advertising injury) handles claims against intentional acts.
Among the area covers are libel and slander, which are reputational injuries, or injury to a person or company’s image or standing. Libel is the propagation of a false statement about a third party in written or electronic form, while slander is a false verbal statement.
Additional areas covered by personal injury include false arrest, malicious prosecution, wrongful eviction/entry and invasion of privacy.
While related to personal injury and often lumped together in policy details, advertising injury handles offenses in connection with the advertising of your goods or services. In the event that in promoting yourself and your business you engage in libel, slander, invasion of privacy, copyright infringement or misappropriation of advertising ideas, your policy will cover any claims made against you.
This part of the policy covers you against property damage or bodily injury that occurs off your premises, but caused by a product that you manufacture, distribute or sell.
If a customer buys your product and it causes illness or injury, you may be sued for lost wages, medical expenses or other damages. This policy will cover your legal fees and any compensation pay-out.
This part of the coverage is basically product liability for tradesmen. If you completed a project, but some part of your work causes property damage or bodily harm.
For example, if you are an electrician and a fixture that you mounted falls onto someone and injures them, you would be responsible, but you would also be covered by your general liability policy.
What’s Not Covered?
While business liability insurance is quite broad, of course not everything can be covered. Typically not included in the policy are:
- Your own property
- Vehicles, boats and airplanes
- Property damage or bodily harm caused intentionally
- Liability as a result of criminal activity
- Employee injury (as discussed, this is covered by workers’ comp)
- Professional errors (covered by professional liability insurance)
To know exactly what’s included in your policy or any policy you’re considering, be sure to ask your insurance agent.