When you're running a business, risk is always around the corner. Whether it's a slip-and-fall accident on your premises or a lawsuit over alleged property damage, unexpected incidents can put your business at serious financial risk. This is where General Liability Insurance (GLI) comes into play. It's a vital safeguard that can protect your business from the financial fallout of various claims. However, understanding exactly what General Liability Insurance covers—and what it doesn’t—is crucial for ensuring you have the right protection in place.
What General Liability Insurance Covers
General Liability Insurance typically provides coverage in three key areas: bodily injury, property damage, and personal & advertising injury.
Bodily Injury
This aspect of GLI covers legal fees, medical expenses, and any settlements or judgments if a third party is injured on your business premises or as a result of your business operations. For example, if a customer slips on a wet floor in your store and gets injured, your GLI policy would cover the resulting costs.
Statistic: According to the Insurance Information Institute (III), the average cost of a slip-and-fall claim is approximately $20,000. Without General Liability Insurance, covering such expenses out of pocket could be devastating for many small businesses.
Property Damage
GLI also covers damages that your business operations cause to someone else’s property. For instance, if your business accidentally damages a client’s property while on a job, GLI can cover the cost of repairs or replacement.
Statistic: A study by The Hartford shows that property damage claims can range from a few thousand dollars to over $100,000, depending on the severity. Having GLI can protect your business from these significant costs.
Personal & Advertising Injury
This includes claims against your business for things like libel, slander, or copyright infringement. If your marketing inadvertently uses someone else’s intellectual property, for example, GLI can help cover legal expenses related to the claim.
Statistic: The U.S. Small Business Administration (SBA) reports that legal costs related to intellectual property disputes can exceed $50,000, making this coverage a crucial part of GLI.
What General Liability Insurance Doesn’t Cover
While GLI provides broad protection, it’s important to understand its limitations. Knowing what isn’t covered can help you identify any additional insurance policies your business might need.
Professional Liability
Also known as Errors and Omissions (E&O) insurance, this coverage is necessary if your business offers professional services or advice. GLI does not cover claims related to professional errors, negligence, or inadequate work. For example, if a client sues you because they believe your professional advice caused them financial harm, GLI will not cover this claim.
Workers’ Compensation
GLI does not cover employee injuries or illnesses that occur as a result of their job. For these situations, Workers’ Compensation insurance is necessary. This coverage helps pay for medical expenses, lost wages, and rehabilitation costs for injured employees.
Commercial Auto Insurance
If your business owns or operates vehicles, you’ll need a separate Commercial Auto Insurance policy. GLI does not cover accidents or damages involving company vehicles.
Intentional Acts
GLI does not cover damages or injuries resulting from intentional acts, such as fraud, assault, or vandalism committed by the business owner or employees.
Property Damage to Your Own Property
GLI covers damage to other people’s property, but not your own. For protection against damage to your business’s property, you’ll need a Commercial Property Insurance policy.
How Pacific Crest Insurance Can Help Fill the Gaps
At Pacific Crest Insurance, we understand that every business is unique and that General Liability Insurance is just one part of a comprehensive risk management strategy. While GLI provides essential coverage, it doesn’t cover everything. That’s why we offer a range of additional insurance products to ensure your business is fully protected.
Professional Liability Insurance (Errors & Omissions): For businesses that provide services or professional advice, we can help you secure Professional Liability Insurance to protect against claims of negligence or inadequate work.
Workers’ Compensation Insurance: If you have employees, Workers’ Compensation is crucial to cover medical expenses and lost wages in case of work-related injuries or illnesses. We can guide you through setting up the right policy for your workforce.
Commercial Auto Insurance: For businesses that operate vehicles, we offer Commercial Auto Insurance to protect your fleet and drivers from the financial risks associated with accidents, theft, or damage.
Commercial Property Insurance: To protect your business’s physical assets, including buildings, equipment, and inventory, our Commercial Property Insurance ensures you’re covered in the event of damage, theft, or natural disasters.
Custom Insurance Packages: Every business is different, and a one-size-fits-all approach doesn’t work for insurance. We can create a tailored insurance package that addresses the specific risks your business faces, combining various policies for comprehensive coverage.
Why Understanding Your Coverage Matters
Choosing the right insurance coverage is one of the most critical decisions you’ll make as a business owner. According to a survey by Hiscox, 44% of small business owners have never been involved in a lawsuit, but of those who have, 53% reported the experience was a financial burden. The average cost of litigation for small businesses is around $54,000, which underscores the importance of having adequate coverage.
By understanding what General Liability Insurance covers and what it doesn’t, you can make informed decisions about additional policies you may need to fully protect your business. For example, a contractor might pair GLI with Professional Liability and Commercial Auto Insurance, while a retailer might combine it with Workers’ Compensation and Commercial Property Insurance.
Conclusion
General Liability Insurance is an essential component of your business's risk management strategy, offering protection against a wide range of potential claims. However, it's not a catch-all solution. By understanding its limitations and complementing it with other relevant insurance policies, you can ensure your business is fully protected against the risks it faces.
At Pacific Crest Insurance, we’re committed to helping businesses like yours navigate the complexities of insurance coverage. Contact us today for more information or to get a quote, visit Pacific Crest Insurance or call us at (888) 938-4197 Mon-Fri 9am - 5pm MST.
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