What Is Commercial General Liability Insurance?
Commercial General Liability Insurance is one of the most important coverages you can buy for your business. It can help cover the costs of bodily injury, property and advertising damage claims made against your business. Without this coverage, you may have to pay the cost of these claims with your own business and personal assets. In today’s world of ever-increasing business lawsuits, don’t leave your business vulnerable to the potentially devastating costs of a liability claim.
A General Liability Insurance policy can help cover the cost of claims against your business for things like:
- Third Party Bodily Injury. If a person is injured on your business property, he may make a bodily injury claim against your business. For example, a package delivery man trips on loose carpeting in your accounting office, falls and breaks his wrist. General Liability Insurance can help cover the costs of the bodily injury claim he makes against your business for this accident.
- Third Party Property Damage. If you or someone on your payroll damages a third party’s property, you may face a property damage claim. General Liability Insurance can help cover the costs of property damage claims made against your business. For example, an employee using equipment on your business property accidentally damages your neighboring business’s office. The neighboring business makes a property damage claim against your business. General Liability Insurance can help cover the costs to settle this property damage claim.
- Advertising Injury. General Liability Insurance can help cover the costs of a claim made against your business because of its advertising practices. For example, a business in the same industry as yours makes a claim that your advertising looks too similar to theirs and is infringing on their business. General Liability Insurance can help cover the costs your business will incur to deal with this claim.
- Reputation Harm. Other businesses may make a claim that your business has harmed their reputation. For example, during an interview about your business, you are asked to comment on what you think of the competition. The competitors read this interview and make a claim that your business slandered theirs. General Liability Insurance can help cover the costs to resolve claims of libel and slander against your business.
Commercial General Liability insurance can help cover costs for:
- Legal teams to represent your small business
- Witness fees
- Evidence costs
- Judgments or settlements
General Liability Insurance (GL) does not cover workplace injuries that happen to employees or other people on your payroll. Such incidents are typically covered by Workers’ Comp. Likewise General Liability Insurance does not cover the costs of damage to your own business property. Typically, it only helps cover the costs of damage your business causes to others. Commercial Property Insurance is designed to help cover the costs of damage done to your business’s property.
Is Commercial General Liability Insurance Required by Law?
No, Commercial General Liability Insurance is not required by law. However, most businesses do not have the financial wherewithal to survive a large liability claim against them. That’s why a General Liability policy really makes sense for most businesses. In fact, four out of 10 small businesses will experience a claim in the next 10 years.1 Liability claims are some of the most common and costly claims made against small businesses. Customer slip and fall accidents account for 10% of liability claims made against businesses. The average cost for a slip and fall claim is $20,000. A customer injury claim is even more expensive. The average cost comes in at $35,000. The most costly liability claim is usually a Reputation Harm claim. Reputation Harm claims cost $50,000 on average. Without General Liability Insurance, you may have to pay for these claims with your own business and personal assets.
Larger companies may not want to work with your business without proof you have adequate business insurance coverage. One of the most important coverages that these companies will look for is General Liability Insurance. They want to know that the companies they hire or contract with are able to complete the work they are contracted to do. If a liability claim is made against your business, and you don’t have General Liability Insurance, it is likely that you will go out of business which could leave the hiring company in a jam.
Often, business owners think that if they have an LLC they do not need business insurance. Typically, an LLC will not protect you if a claim is made against your business because:
- You acted negligently or irresponsibly
- You did something illegal (knowing or unknowing)
- You mixed your personal expenses with your business expenses
Of course, no business owner plans on acting negligently or irresponsibly. But accidents happen. And even the most honest business owners can make a mistake. And your business can be sued if even you’ve done nothing wrong. That’s why it’s important to carry General Liability Insurance. General Liability Insurance can also help handle the bulk of the work involved in a claim. As an LLC, you must respond to complaints and would have to hire your own lawyers. With General Liability Insurance, the insurance company helps handle much of the legal efforts, which allows you to remain focused on running your business.
General Liability vs. Professional Liability Insurance
General Liability and Professional Liability Insurance both help protect your business from the costs of liability claims. They differ in the types of claims they cover. Professional Liability Insurance covers the costs related to claims your business committed errors or omissions in the services or products it provides.
For example, Professional Liability Insurance typically covers claims of:
- Errors in professional services your business provided
- Failure to uphold contractor promises
- Incomplete work or work not done to expectations
- Mistakes and omissions in professional work performed
Select the Right Commercial Insurance Coverage for Your Business
For over 200 years The Hartford has been helping to businesses prepare so they can prevail through the variety of risks they face. We understand that no two businesses are alike. Whether you’re a large corporation with a workforce of thousands or a small business with a few employees, we’ll work with you to find the right coverages at the right price.
You can rest easy knowing that your business is The Hartford’s top priority. Our patented claims process and our claims specialists and response teams consistently receive top scores for customer satisfaction.
Get a quote today to learn how The Hartford can help protect your business.