When General Liability is Needed
You’ll find that General Liability is generally needed from the start of your business. However, there are specific criteria you may meet that might make it even more valuable for you. If your business:
- Handles heavy equipment around customers’ property
- Provides contracting work where progress interruptions may occur due inclement weather
- Performs subcontracting work that requires a Certificate of Insurance
- Frequently has customers come onto your property
...then you will likely need to purchase this type of insurance.
When customers come onto your property, they may accidentally be injured while on the site. Something as small as a slip and fall incident may result in a customer filing a claim against your business for an injury. General Liability will help mitigate this risk by covering the legal expenses and medical expense payouts if this occurs.
Particularly of concern for contractors is the possibility of damaging a customer’s property. Depending on the nature of your contracting work, this may be more or less likely to occur, and it can be costly. For example, if a worker leaves an oily rag in a customer’s garage, it may catch on fire on a hot day, causing damage to your customer’s property. Your business would be held liable for the damages. Depending on the extent of the damage, this could be extremely costly, and potentially put an uninsured contractor out of business.
There may also be times you are unable to meet agreed-upon deadlines for the work you’re contracted to perform. Issues such as inclement weather can shut down all operations and put significant delays on projects. If that happens, the client may claim that contracted work was not performed.
Additionally, there is a good chance that some customers will require a Certificate of Insurance. Especially if your business provides subcontracting work to others, those businesses and organizations may require a Certificate of Insurance as proof that you are properly insured, allowing their organization to have a fallback in case of a third-party claim. Most organizations that use subcontractors prefer not to assume the risk themselves, even if they do trust the contractors they’re using to perform the work.