With general liability insurance, you will have protection against lawsuits and claims. We’ve evaluated the best business insurance providers based on coverage, financial stability, customer satisfaction, and overall quality.
Coverwallet began its journey in New York City in 2015 operating under the
Aon Insurance banner. At Coverwallet, you can access everything you need to
keep your company well-protected at an unbeatable price.
With a 100-year history of insuring businesses, Hiscox is well-known across
America and globally. With more than 500,000 small business customers,
Hiscox is fully aware and trained in the unique risks a business can face.
Thimble provides business insurance that can be tailored to your business by
the year, month, day, or even the job. At Thimble, the process to getting
the right business insurance is simple, scalable, and flexible.
General liability insurance, also known as business liability insurance or commercial general liability insurance, helps protect your assets and business from lawsuits with claims of bodily injury and property damage. These types of accidents that result in claims can occur during normal business hours and operations. They can also occur when the business is closed so coverage is crucial. Otherwise, you will be looking at paying for these claims and all costs associated with litigation out of pocket.
Who needs general liability insurance?
Business owners may wonder what the big deal with general liability insurance is and if they even need it. Sometimes, lawsuits arising from claims against your business can cost in the hundreds of thousands of dollars, and depending on the size of the claim, can be upwards of seven figures. Many small businesses would be crippled, if not forced to shut down, should they be required by the courts to pay this amount in a lawsuit.
Two out of five small businesses will likely experience a liability claim within the next ten years. The most common claims are from slips and falls, which can sometimes result in a visit to the emergency room. The average cost of this kind of claim is roughly $35,000. If this claim is filed and turns into a lawsuit, the average cost can increase to more than $75,000 to defend in court and settle. General liability insurance will cover these expenses as long as they fall within coverage.
What does general liability insurance cover and exclude?
General liability is there to cover any expenses that arise when responding to a claim that your business may be liable for. This claim can include bodily injury or property damage.
The medical expenses of a customer or client if they get injured in your business or area of operation. For example, a customer spills their drink and does not tell anyone. A different customer steps in the puddle and slips, injuring their back. They require minor surgery and physical therapy due to this fall and sue you for $150,000. Your general liability insurance policy can help with the associated costs for bodily injury.
Repairs or replacements of any property that is damaged as a result of your business operations. For example, you rent a space in a building to start a bakery. A month into making cupcakes, your kitchen catches on fire and destroys part of the building. Your landlord sues you for $200,000 in damages. Your general liability insurance policy can help with the associated costs for the property damage.
If a lawsuit is filed against your business, general liability insurance will cover the costs for defending your business. Any judgments and/or settlements from a lawsuit filed.
Claims of bodily injury or property damage caused by your business or products. For example, you sell custom gardening tools. You sell a faulty tool that breaks when a customer tries to use it and injures them. As a result, they have to go to the Emergency Room to get stitches and physical therapy to rehabilitate. As a result, they sue you for $40,000 to cover their medical costs and impact on their life. Your general liability insurance policy can help with the associated costs for bodily injury.
Advertising injuries like accidentally using copyrighted material in your marketing materials. For example:
You create an advertising campaign centered around a graphic that your business partner introduced and assured you it was original. A week after you launch the campaign, you get served with a $100,000 copyright infringement lawsuit by the original owner of the graphic.
You create an advertising campaign comparing your product to the inferior product made by your competitor. A week later, your competitor sues you for $75,000 for slander.
General liability insurance can help alleviate these unexpected costs and provide peace of mind. It create a protective financial barrier from possible lawsuits and helps you avoid potentially crippling financial pitfalls.
General liability insurance does not cover all claims made during business operations. Here are a few exclusions that are generally not covered by general liability policies:
Injuries or illnesses sustained during your business operations by employees. These types of claims are usually covered by workers compensation insurance. This insurance will take care of their medical expenses and residual costs of care and loss of income resulting from the injury.
Your own business property being damaged. A separate commercial property insurance will help cover this type of event.
Any errors made during a service for a fee transaction between your business and a client. A good error and omission insurance policy, also known as a professional liability insurance policy can cover you for this.
Intentional infringement of copyrighted material will typically not be covered.
Excluded will also be any claims of willful negligence, like knowing that something is damaged and the status is recorded, but not doing anything to remedy the situation.
What are the limits of general liability insurance?
The majority of small businesses purchase a general liability insurance policy that will pay up to $1 million per occurrence, and $2 million aggregate policy limits. This means that to cover a single claim, the insurance will cover up to $1 million. It will pay out up to $2 million dollars for the life cycle of the policy, which is usually a one-year cycle.
Higher limit policies can also be purchased, with the next tier up being $2 million per occurrence and $4 million aggregate limits. There are also higher insurance plans for large-scale businesses which may require customized quotes based on trade, organization size, geographical locations, etc.
How much does general liability insurance cost?
The cost of general liability insurance varies depending on the type of business that is applying for the policy. A higher accident risk industry like construction will have a higher premium than a retail apparel store. This is not the only factor that plays into effect when calculating the premium. Other factors that affect the cost of general liability include:
Time in business, years of experience.
The physical location of the business and/or the geographical territory in which it conducts its operations.
The size of the business in terms of employees, contractors, etc.
If the business is a brick and mortar model, the condition of the building plays into effect.
Policy limits are also a big factor in determining costs of a policy. Obviously, the higher the limit, the more comprehensive the insurance, the higher the premium!
Your business’s history is looked at. If you have a lot of insurance claims against your business, you become a higher risk client for the insurance company so you may see higher premiums until you can show reduced rates of claims.
How to choose the best general liability insurance
Getting a quote is the best way for you to see where you stand as a client. Here are a few things to look for when shopping for a general liability insurance provider:
Customized solution to fit your needs: Every business is different, including yours. That is why a provider should be able to customize their existing products to meet your needs.
Offers a few different price points and product tiers: The provider gives you a few different options and lets you pick what will work best with your budget and requirements, versus trying to sell you the highest priced product.
Able to accept a variety of different payment methods: This will make it easier for you to cycle payment methods and collect rewards points, depending on which methods you use.
