Running a small business can be complex. There are many decisions to make and regulations to follow. As a business owner, it is up to you to ensure that your business is protected with the right level of insurance.
The insurance system can seem complex, so in this article, we will talk you through the basics of general liability insurance, what it covers, and how it differs from other types of insurance, and where to buy it.
What is general liability insurance?
This kind of insurance policy is a wide-ranging one that protects your business from claims arising from property damage or physical injury. It covers admin costs, legal fees, and any settlement payouts resulting from a decision not in your favor.
Is it a legal requirement?
At present, it is not a state legal requirement for a business to hold general liability insurance. However, many potential clients will insist that you have it before they award contracts. You may also be excluded from competing for certain contracts.
Why is it important for small businesses?
It’s good business sense to protect your business from financial harm. Could you afford to pay legal expenses and settlement payouts if a claim were to be brought against you?
You could be looking at sums reaching hundreds of thousands of dollars. It could be the difference between staying in business and shuttering.
Even if a lawsuit is eventually dropped by the other party, you could still have spent thousands of dollars on legal advice up until that point.
If any of the following apply to you, then arranging general liability insurance is important:
- Your business premises are accessible to the public or visited by clients or business partners.
- You use any social media platforms such as LinkedIn, Facebook, Twitter, Instagram, Pinterest, or TikTok (privately or business-related)
- Your work is carried out on or near your clients’ property/premises.
It is important that you think carefully about the level of coverage you need. Not all policies are the same and may have different exclusions and policy limits. You don’t want to find out the hard way that you aren’t adequately insured.
What does general liability insurance cover?
As mentioned earlier, general liability insurance covers a broad range of situations that involve property damage and personal injury, including:
- Physical injury – customers injuring themselves at your place of business, accidents involving employees.
- Property damage – for example, an employee damages a fence, decoration, or window at your customer’s home while carrying out work on behalf of your company.
- Defamation and advertising injury – if someone acting on behalf of your business says something that negatively affects another company, either through reputational damage or on a financial basis.
- Copyright claims – if you have used copyrighted material without the owner’s permission.
What is not covered?
General liability insurance isn’t suitable for every type of situation. You must look at your policy terms carefully so you can see what you are and are not covered for. Other specialist insurance products are available to cover those particular circumstances. General exclusions include:
- Illegal actions carried out by employees of the business (where this has been done with the knowledge that the action carried out was illegal).
- Motor vehicle accidents involving company vehicles being used for work purposes. If you have any commercial vehicles, you will need special auto insurance to protect you under these circumstances.
- Injury or illness of employees because of their work at your company. Once you employ someone, you are usually required by law to ensure you have workers’ compensation in place to cover their medical bills, loss of earnings, and care expenses.
- Damage to your business property or equipment, whether intentional or accidental will need to be covered under commercial property insurance.
- Professional advice claims. If a client claims they have been financially impacted negatively because of the advice you have given them, then this will fall under professional liability insurance.
Every policy will have a limit on the amount you are insured for. Any costs above this level will need to either be paid for by the business or through an umbrella insurance policy.
How does it differ from professional liability insurance?
You might think that if you have professional liability insurance, you don’t need general liability insurance and vice versa. This is not the case. The two policies cover very different areas.
While general liability insurance covers you against physical injury and property damage, professional liability covers you against claims related to services or advice you have given. If, because of the advice you have given, or service you have carried out, the client has been impacted financially.
Where to buy general liability insurance
There are several ways to purchase this type of policy. Many insurance companies allow you to buy direct from them, but this is not always the best option for a lot of small businesses both in terms of coverage or price.
You should certainly never buy insurance without looking closely at the fine print.
Schumacher Insurance Agency has extensive experience in assisting businesses of all sizes to find the right insurance for them. We don’t believe in a one size fits all approach. We work with you to assess your business needs and risks and recommend the best insurance carriers to protect you fully.
We aren’t tied to a particular insurer, so you will always receive the impartial advice you need from us at very competitive prices.
Our team is highly qualified and experienced, trusted by hundreds of businesses in New Jersey and beyond. We’re proud of our reputation for integrity, great customer service, and innovation.
In addition to our general liability insurance, we also specialize in other areas of insurance including::
- Business insurance (including general liability insurance and professional liability insurance).
- Cyber liability insurance
- Employer practices liability insurance (EPLI)
- Personal insurance policies
For a discussion about your business insurance needs, please get in touch with us today via our contact page or by calling (973) 237-1000.