Five facts about general liability insurance
While there are several types of business liability insurance, general liability insurance may meet your initial needs. Here are five important facts to keep in mind about general liability insurance:
- Nearly every business can benefit from it.
- It only pays for lawsuits filed by third parties—not employee claims.
- It will help pay for any expenses you must pay relating to a lawsuit.
- It will cover you if someone is injured while at your store, office or property.
- While not usually required by law, if you apply for a business license, you’ll likely need the coverage.
When it's time to make a decision about general liability insurance, do your homework. Don't just automatically go to the same insurance agency where you have personal policies—they may not have everything you need. To better understand what insurance coverage you may need, talk to other businesses within your industry about their level of coverage and trusted sources they may use.
Once you’ve developed a few options, compare coverage, premium costs and expertise. The following are some of the key elements you should learn as you research the right policy for your business.
What does the policy cover?
Most general liability insurance policies cover the following:
- Actual (or alleged) physical or property damage
- Injuries that take place on your premises or as a result of your products, as well as medical payments
- Claims of slander, libel, misleading advertising or copyright infringement
- Fire damage
- Any legal fees, court costs and settlement costs
Who will the policy cover?
With most polices, the coverage is determined by the type of business you own. If you’re a sole proprietor, you’ll be covered (and possibly your spouse). But if you own a corporation or LLC, that coverage may extend to other owners, shareholders, directors and officers.
What are the policy's limits?
This refers to the total amount the policy will pay in the case of a claim. In most instances, a standard business liability policy limit will range from $1 million to $2 million. Based on the type of business you own and the risks associated with your business, you’ll want to choose a policy with adequate protection.
Will you need additional coverage?
In some instances, you may be required by state or federal law to have specific insurance coverage for your business. In others, you may think you need more coverage to better protect your assets. Here are some common examples of specialized insurance and endorsements:
- Worker’s compensation
- Professional liability
- Liquor liability
- Pollution liability
- Marine or aviation policies
- Flood policies
Having adequate insurance coverage can be one of the most important steps you can take to ensure your business’ survival. While safeguarding your business can be costly, it will provide a solid foundation for success.
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