Liability is a complicated subject for most people. Unless you're a lawyer or you work for an insurance company, it's not always clear whose fault an accident is. You may have heard of general liability insurance. This is a vague term that broadly encompasses a variety of situations. But just what is it and to whom does it apply? See who should purchase it and how it protects your business.
Business Coverage
General liability insurance is sometimes called commercial general liability (CGL) coverage. It's not designed for personal use. While liability policies can be part of your home, auto or renters insurance, CGL policies apply to businesses.
So if you leave a children's toy out in the middle of your hallway and someone trips, you would file a claim under a personal policy as opposed to general liability. If someone slips on a wet floor in the business, however, you will need to turn to your CGL policy.
What Is General Liability Made for
CGL policies will cover against third-party bodily injury and property damage. So if you work with a vendor and they break their leg on your property, you can file under general liability coverage. It can help the injured party to cover anything from their medical bills to lost wages. Or, if one of your employees accidentally damages the vendor's car, you can use general liability to pay for the repairs or a replacement.
General liability coverage also often covers advertising injury. This means you can defend yourself if another business claims that you violated their trademark. Or, it can also cover reputation damage, in case you make a claim against a competitor that they feel slanders their good name.
Why Buy General Liability Insurance?
CGL insurance is necessary for all businesses. It serves as a means of protecting both the people and property on the premises.
However, if your employees get injured, you'll need workers' compensation. It can ensure that they get the treatment they need. Unlike workers' compensation general liability coverage isn't often required. But, few businesses can swallow the costs of a lawsuit if they're sued for negligence.
General liability insurance comes with limits, meaning that the policy will be unable to pay past a certain point. Because lawsuits can quickly become expensive, it's important to know what the limits are and whether they fit your business needs. Talking to your agent can go a long way toward helping you understand your policy.