General Liability Insurance: Everything You Need to Know (2024)

Running a business also means you have many things to be responsible for, including getting a general liability insurance policy. Unfortunately, many business owners don’t give general liability insurance much thought. After all, the law doesn’t really require them to get one.

What they fail to realize, however, is that every company needs general liability insurance to protect them from potential lawsuits.

What Is General Liability Insurance?

Risks are an inherent part of doing business. If you run a shop and a customer slips and falls inside its premises, you will likely find yourself the subject of a lawsuit. The same thing will happen if you’re a roofing contractor, and one of your workers drops a tool and damages a parked car.

General liability insurance is what will shield your company and its assets from such claims or lawsuits. Whatever personal injury or property damage your company may get accused of inflicting, a general liability insurance policy will pay for it.

Without one, you will have to pay for people’s claims against your business out of pocket.

What General Liability Covers

• Third-Party Injuries —

  Any accident that causes injury to a third party inside your place of business has the potential to become a lawsuit against your company.

  General liability coverage will pay for the injured party’s medical expenses, as well as lost wages, among other things.

• Third-Party Property Damage —

  Let’s say a fire originated from your shop and went on to damage a significant portion of the building.

  Your landlord can file a lawsuit against your business. Your general liability insurance policy will shoulder all the costs that such a claim will entail.

• Advertising Injury —

  There’s always the possibility that your advertising efforts for your business could trigger lawsuits that could hurt your bottom line. A certain party could sue you for using a copyrighted image in your ad.

  If your ad takes potshots at your competition, the concerned business could file a lawsuit saying they lost customers because of it. General liability insurance will take care of the costs that come with advertising injury claims against your business.

• Legal Expenses —

  The expenses that a lawsuit brings on can be considerable, especially if the case reaches the courts and leads to an unfavorable result for you. General liability insurance will pay for court costs, judgments, and settlements. It will also cover lawyer’s fees as well as related costs like travel expenses and photocopying documents.

How Much Coverage Do You Need?

When purchasing general liability insurance, make sure you get a policy with limits that match the perceived risks that come with operating your business. If your business involves the handling of chemical products, for example, then you should get higher general liability coverage than, say, a convenience store.

The size of your business will also factor in when you buy general liability coverage. The bigger the business you’re running, the greater the risk that someone will sue you.

Let’s say you’re a general contractor, and you have people working on projects in multiple locations. More workers in various locations mean the possibility that they will cause an accident that will cause personal injury or property damage is higher. In very much the same way, more company vehicles running means the risk of a driver getting involved in an accident would be greater.

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Why Is a Business Lawyer Essential to a Company?

Another factor to consider when determining how much coverage you need is the location of your business. Some states have a history of rewarding plaintiffs with higher damages. If your business is operating in one such state, get higher coverage to be on the safe side.

The risks that come with running a business are manifold. Many enterprises have already folded because of claims and lawsuits that have practically drained their finances.

You can set such worries aside as long as you have a general liability insurance policy. With the right general liability insurance coverage, you will have a safety net that will ensure your business’ continued operations long after settling your legal troubles.

Image Credit: general liability insurance by twenty20.com

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