What is general liability insurance?
In today’s litigious world, every business owner faces a number of liabilities that can be crippling. With general liability insurance, you can ensure your legal expenses and payouts will be covered if you are ever found to be legally liable for claims involving your employees, products, or services.
General liability insurance, also known as third-party insurance, is an essential policy for both businesses and contractors. It offers protection against claims related to third-party losses including bodily injury, property damage, and personal injury.
Who needs liability insurance?
Simply put, nearly every business needs some type of liability coverage. This is especially true for those that:
- Interact with customers face to face
- Perform work on customers’ properties
- Conduct business in third-party locations
- Advertise their products or services
Liability insurance is also often a requirement when it comes to signing contracts, so having an up-to-date policy helps keep your business operations running smoothly.
What does liability insurance cover?
Bodily injury and property damage
Any time a customer steps foot onto your property, something could potentially go wrong. Accident liability is a real concern. In the event that someone is injured at your place of business, general liability insurance can cover medical costs and legal fees associated with their claim.
Similarly, if someone’s property is damaged because of something you or your employees did, general liability insurance can cover the cost of repairs or replacements.
Personal and advertising injury
Words have a lot of power. If you or your employees say something about a customer that could be considered damaging to their reputation, you can be sued for slander. Without liability insurance to cover your legal fees, such a claim can be financially disastrous for your business.
General liability insurance can also protect against claims of copyright infringement, invasion of privacy, theft of ideas, or slander and libel in your advertising. It does not, however, always protect businesses against false advertising claims.
Environmental and pollution liability
If your business deals with hazardous materials, your risk as a business owner increases exponentially. These liabilities can be directly related to your work, such as a leak that causes environmental contamination, as well as work performed by subcontractors for which you may still be liable.
In these instances, pollution liability insurance can cover bodily injury and property damage claims, as well as clean-up costs and other legal fees.
Data breaches are an unfortunate reality of the Digital Age. Therefore, cyber liability insurance is a necessity for any business with a computer system. This policy covers breaches involving sensitive customer information such as credit card and social security numbers, health records, and other personal data.
In the event of a breach, cyber liability insurance can cover legal expenses, as well as help notify customers of the breach, recover data, and repair any damaged computer systems.
Employment practices liability
As an employer, you may be exposed to certain employee-related risks, such as wrongful termination suits and claims of discrimination, harassment, and retaliation. There is also the risk of being sued for discrimination when you don’t hire someone.
Employment practices liability insurance (often referred to EPLI coverage) protects you against these risks, covering legal expenses and damages to your business’s reputation.
Mistakes happen, but in the context of your business, those mistakes can harm your customers. That’s why any business that provides professional services should have professional liability insurance, also known as errors and omissions insurance.
This policy protects you against claims of negligence, misrepresentation, errors, and omissions. It does not, however, cover criminal liability or defense, or liabilities otherwise covered by your general liability policy.
Contractors are exposed to risk every day, whether it be damage to a client’s property or accidents that cause bodily harm. Especially in situations where multiple subcontractors are involved and risk is multiplied, it’s important to have general liability insurance coverage to protect yourself.
For many contractors, having an existing, up-to-date general liability policy can also speed up the bidding process, as a certificate of insurance is often required by clients before any contract can be signed.