What Is General Liability Insurance Coverage?

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Who Needs General Liability Insurance?

General Liability insurance, also known as Business Liability Insurance or Commercial Liability Insurance, is one of the most commonly purchased types of business insurance. It is a mandatory requirement for most types of business and should be one of your first considerations as you are starting out.

If you're a business, entrepreneur or contractor that deals with anyone other than your own staff or operates from a premises that is not your own, you will probably need some form of General Liability coverage as it protects your business from third party claims of bodily injury and property damage.

If you are a contractor carrying out work for another company, they may well require you to have General Liability coverage.

What Does General Liability Insurance Cover?

General Liability insurance covers you against 'third-party lawsuits' brought against you by anyone who is a third party (generally, not an employee). Coverage includes:

  • Injuries and accidents on your premises: For example, a client tripping over something at your office or a display stand falling on a customer in your shop.

  • Property damage: If you or your employees cause damage to anything belonging to someone else, such as a client's laptop getting water on it at your offices.

  • Non-physical personal injury: If someone (customer, client, competitor) takes you to court for damages to their reputation, copyright infringement, false advertising, etc.

General Liability insurance will cover legal costs, medical costs and repair costs associated with the claim.

General Liability covers the owner(s) of a business as well as others associated with the business when representing the business. These include employees and volunteers. For corporations, it also includes executive officers and shareholders. The policy can also include subsidiary organizations and those contracted to carry out work for your business.

What Does General Liability Insurance Not Cover?

General Liability Insurance will not cover:

  • Issues relating to employees (this is covered by Workers Compensation)
  • Damage to property you own (this is covered by Commercial Property Insurance)
  • Professional mistakes or negligence that cause financial loss to customers or clients (this is covered by Professional Liability Insurance)
  • Data breaches and cyber crime (this is covered by Cyber Liability insurance)

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How Much Does General Liability Cover?

General Liability coverage is priced according to your type of business and perceived risks associated with the business. So, for example, a construction business will generally have higher premiums than a company that designs websites. The costs for a small business often range between $750 and $2000 and your policy will outline the limits of coverage. You can increase your coverage limits when purchasing the policy, or by getting Umbrella insurance in addition.

If your business is fairly low-risk, you could consider taking out a Business Owner's policy (BOP) which is a cost-effective combination of General Liability and Commercial Property coverages.

You can find out more about General Liability insurance and get a free quote here.