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What does General Liability Insurance Cover?

If you run a small business and need a business insurance policy to protect your business, the first policy you should obtain is the general liability insurance, also called commercial liability insurance. In general, it protects your business against claims for bodily injury, damage to property, or personal injury. Let’s learn more about the specific coverages of general liability insurance.

What Exactly does General Liability Insurance Cover? 

Bodily Injury: 

These are situations where a client could get hurt, either on your business’s property or their own. Businesses where injuries are common–gyms, sports leagues, even yoga studios–should take steps to protect themselves. Construction, engineering, and blue-collar jobs like plumbing and welding all would also be good candidates for general liability insurance. But even if your business isn’t a high-risk for injury, accidents still happen. Better to be prepared than have an expensive lawsuit on your hands. 

Damage to Third Person Property: 

This covers property damage at a client’s home or business. If one of your employees breaks a client’s priceless vase, or your construction worker accidentally puts his wrecking ball into the nearby Starbucks, you’re going to want general liability insurance. You’ll be covered for any damages to a third person’s property, and won’t have to pay the expenses out-of-pocket. 

Advertising Injuries: 

If your business advertises, you’ll want to consider this. You could be held liable for infringing on a trademarked copyright or slogan if your business’s ad is too similar. You could also be on the hook if you inadvertently use an idea in your ads that belongs to a third party. General liability insurance protects against these advertising injuries, which could happen even to well-meaning businesses. 

Medical Expenses: 

These are the medical costs of the bodily injuries covered above. There are thousands of ways for clients to get injured, and you don’t want to be on the hook for expensive medical bills. Be sure to note that general liability insurance does not cover you or your employees in case of injury. This is covered by separate Workman’s Compensation insurance. 

Legal Defense Costs: 

Even groundless lawsuits can be stressful, time-consuming, and expensive to fight. Legal fees can easily run into the tens of thousands of dollars, which could be a death sentence for small businesses. General liability insurance covers legal fees and defense costs for your business, whether or not the claim against you is legitimate.  

>>MORE: Best 5 Providers of General Liability Insurance for Small Businesses

What does General Liability NOT cover? 

While general liability insurance is quite useful, there are some things it does not cover. Any injury to you or your employees is not covered, and will have to be covered under Workman’s Comp insurance. Any property damages to your business caused by carelessness or employee error are not covered by general liability, but by commercial property insurance. Any vehicles used by your business are not covered either under general liability (you’ll need commercial auto insurance for that).

What is General Liability Insurance? 

Also called small business liability insurance or commercial liability insurance, general liability insurance protects your business against claims for bodily injury, damage to property, or personal injury. General liability insurance might pay medical costs if a customer is hurt at your place of business, or it could pay for repair or replacement if a worker from your company damages a client’s property. General liability insurance also protects against libel or slander from past or current employees. It’s important for companies of all sizes, but especially for small businesses, which may not be able to afford to pay for damaged property or medical bills. 

Who Needs General Liability Insurance? 

All businesses should consider general liability insurance, especially small business owners. Any business where you or your staff interact with clients or enter client homes is going to want general liability coverage. If your company uses third-party locations for jobs, you’ll want protection against injury and property damage at the job site. Put it this way: does your company advertise? If so, you probably want general liability coverage.  

>>MORE: How Much does General Liability Insurance Cost?

Final Thoughts

Now that you know the ins and outs of general liability insurance, you’re ready to make an educated decision about coverage. It’s important to remember what general liability insurance covers (bodily injury, medical expenses, damage to client property) and what it doesn’t (workplace injuries to your employees or property). No one knows your business better than you–the risks, the challenges, the potential for growth. With the information above, you’ll be able to compare rates and quotes from different companies and choose the best coverage for your business. And don’t forget to consider bundling general liability insurance with other types of coverage, like commercial auto insurance or workers compensation insurance. It can save you time and money in the long run!

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