Insurance Spotlight: Get the 411 on a General Liability Insurance Policy

For small business owners, general liability insurance is one of the most important types of small coverage you need to protect your business. This insurance not only protects your business from claims of bodily injury but also covers property damage and personal injury that your business might have caused.

General liability insurance is a necessity. Without this type of coverage, a single event or lawsuit can cripple your business. It’s important to note that you will need to buy enough coverage to match your level of exposure and decide if you want to add on any optional coverages to your standard general liability policy. Here’s the scoop on how general liability insurance works:

General liability insurance, also called business liability insurance or “slip and fall” insurance, protects your business from financial losses if you’re sued for causing bodily injury, personal injury, or property damage.

In the following types of scenarios, general liability insurance might be required:

  • Local governments might require general liability insurance from construction businesses and other businesses in specific industries.
  • A landlord might require liability insurance when you sign a commercial lease.
  • You might need to show proof of general liability insurance when applying for a business loan.
  • If you plan on contracting with other companies, it is likely they will require you to show proof of general liability insurance. This is the other company’s way of ensuring that your business can survive a liability claim and meet your end of the contract obligations.
  • Even if you don’t have a brick and mortar location, general liability coverage is important. For example, you can still be sued if your advertising practices infringe on another business. And wherever you provide services from, you could inadvertently injure another person or someone else’s property. General liability insurance is designed to protect against such risks.

A Business Owner’s Policy Combines General Liability and Property Insurance

General liability insurance is typically the first line of defense when someone files a legal claim against your business. Although you can purchase general liability insurance on its own, it’s usually one part of a business owner’s policy (BOP). A BOP typically combines general liability insurance and commercial property insurance. On top of these two essential coverages, some insurers will let you add business interruption insurance, cyber liability insurance, or professional liability insurance to a BOP.

The benefit of a BOP is convenience and affordability. Instead of having multiple insurance policies, potentially from different insurers, you have a single policy from one insurer. Since everything is one package, a BOP also lets you save money on premium costs.

What Does General Liability Insurance Cover?

Most general liability insurance policies include standard forms published by the Insurance Services Office (ISO). The ISO provides advisory information and services to insurance companies. One way they help insurance companies is by drafting standard policy language. Most insurers use the standard ISO policy form for general liability insurance.

Under the ISO’s standard language, general liability insurance covers the following types of claims:

  • Bodily injuries
  • Medical payments
  • Property damage to other property (but not to the business’s own property)
  • Advertising injuries and reputational injuries, such as libel or slander
  • Most people think only of slip and falls when they think of general liability insurance, but the scope is broader than that. General liability insurance extends to a variety of claims arising from your business services and operations. Actions by you, your business partners, and employees are covered.

General liability insurance offers pretty broad liability coverage for your company, but there are risks that it doesn’t cover. For these risks, there are different insurance products you can buy to protect yourself.

Here’s what general liability insurance doesn’t cover:

  • Damage to your own property: You need to purchase commercial property insurance to protect your business’s own property against damage or theft.
  • Professional negligence (but BOP): Negligence in providing professional services is covered by professional liability insurance, not general liability insurance. For example, if you’re a software engineer and your services cause a client’s website to crash and lose revenue, then the client could sue you for professional negligence.
  • Auto claims: Injuries from the use or operation of a company vehicle are covered under a commercial auto insurance policy.
  • Employee injuries: Employees who are hurt on the job should file claims under a workers compensation insurance policy.
  • Product defects: Product liability insurance covers manufacturing, design, and marketing defects.
  • Lost business income: When businesses have to close shop or scale back operations due to an unexpected event, it can cause a significant loss in income. This is covered by business interruption insurance.
  • Keep in mind that it’s possible to combine general liability insurance and some of these coverages in a BOP. A good insurance provider should understand your business’s specific risks and work with you to customize a general liability insurance policy.

At Roper Insurance, we value your business as much as you do and want to help you find the best protection at the best rate so that you feel confident knowing that you have a trusted partner and advisor looking out for your best interest,

We would be happy to sit down with you to evaluate what policies are best for your business needs and goals. For more information on a general liability insurance policy, contact us today at 303-721-1125. We’d be happy to address any questions you may have and help you find a policy tailored to fit your business.