General Liability Lawsuit Examples

Already know what you need? Get started on your application by entering your zip code.

Prefer to speak with a CoverWallet consultant? Call (646) 844--9933 anytime

General Liability Insurance

Nearly every small business should consider purchasing general liability insurance, which offers protection from claims of third party damages or injury. Generally, a third party is anyone who is not an employee of your business, like a customer, vendor, or partner. If you deal with anyone that falls into this category - and when you’re running a business, it’s hard not to - your best bet to mitigate risk is with the proper insurance.

Claims covered under general liability insurance include third party personal injury, copyright infringement, and property damage. If your business is sued in these situations, your coverage will pay for legal fees, including the cost of hiring an attorney and court fees, as well as the cost of damages and settlements.

Lawsuit Examples: How General Liability Insurance Could Protect Your Business

Let’s take a look at some examples of common lawsuits that would be covered by general liability insurance:

  • Slip and fall injury: A retail shop is sued when a customer slips on a wet floor while shopping. It had been raining heavily, and employees were too busy handling an influx of shoppers to clean up the slippery floor. The customer sustains personal injuries and requires medical treatment. She sues the store for $50,000 of medical costs and other expenses.

  • Property damage claim: A contractor is working on a home renovation project. One day, he accidentally causes significant damage to a wall, leaving a room exposed to the outdoors and the house temporarily unlivable. The homeowners sue for $125,000 to cover the cost of repair to the wall and temporary housing.

  • Product liability lawsuit: A fashion designer sells a collection of t-shirts that are manufactured overseas. Unbeknownst to her, the manufacturer is not adhering to U.S. flammability standards. A customer who purchased one of her shirts is severely burned in an accident because of this manufacturing defect, which is uncovered during the investigation. The customer sues the fashion designer for $200,000 in medical and personal damages.

  • Copyright infringement: An entrepreneur wants to launch a website for her new business, and hires a web design and creative marketing team to help. They put together a website complete with photos of the business’s products and the city the company is based in. The only problem is, one of the photos of the city may have been protected under copyright. The photographer who claims to own the photo discovers its potentially improper use, and sues the business for $5,000 in copyright infringement.

  • Reputation damage: When talking to a reporter, an employee of a software company says something negative about a competitor that may not be true. The rumor is widely covered by industry trade media, resulting in backlash on social media toward the competitor. The competitor sues, claiming a case of slander that cost them potential customers by damaging their reputation.

Key Limitations to Consider

Be aware of the limits of your general liability policy, or maximum amounts the insurer will pay in different situations. Many small businesses purchase policies with aggregate limits of $1 to $2 million.

It’s also important to note that general liability insurance does not cover claims brought by employees. Those would be covered under workers compensation, which can pay for things like lost wages and medical bills resulting from an on-the-job injury. In most states, workers compensation is legally required once you have a certain number of employees.

General liability insurance also doesn’t cover damage to your own property that occurs in cases of fire, theft, vandalism, or natural disaster. However, many small businesses can purchase a Business Owner’s Policy, or BOP. A BOP bundles general liability and commercial property coverages together in a simple, more affordable package, so you can be covered on both fronts.

Are you ready to get down to business?

Great, just click get a quote and you’re off.