What Is General Liability Insurance? And How Much Of It Do I Need?

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What Is General Liability Insurance? And How Much Of It Do I Need?

General liability insurance is the first to strike my mind when we talk about must-have insurance policies for business people. It is also called business liability insurance and commercial general liability insurance. 

But why is it needed in the first place? A very valid question!

Because general liability insurance protects you from many lawsuits related to bodily injury, property damage, etc., which can quickly occur but lead to many difficulties if you do not have insurance! So, let us know what general liability insurance is?

 

What Is General Liability Insurance?

General liability insurance is a life-saving policy for businesses and offers the following coverages:

#1: Bodily Injury

Say you are a home baker, and a client comes to pick her engagement cake. But she twists her ankle while being chased by a dog on your property; she might sue you for her injury! Worry not; the insurance can cover their medical bills and your legal costs.

#2: Property Damage

Consider, you are an event planning company, and you damage the tiles of your client while doing the decorations for the event. Again, your client might sue you for their losses. The insurance, in this case, will cover their losses and your legal costs.

#3: Product Liability

If you sell an automation part that malfunctions and damages the customer’s automobile, you might be sued. Again, insurance can cover their losses and your legal costs!

#4: Certain Libel And Slander Statements

Consider you say that your company/product is better than a competitor’s on a TV channel. Then your competitor can sue you for harming their reputation. But, general liability insurance can be your rescue. It can cover your legal costs.

In the absence of general liability, you risk business continuity due to these lawsuits. Insurance can help you not only financially but with peace of mind and confidence that you are protected no matter what!

But the next question is, how much insurance do you need?

 

How Much General Liability Coverage Do You Need?

It is difficult to predict everything that can go wrong for the next year, but there are ways to calculate a rough idea about your general liability coverage limit.

Also read: Short-Term Liability Insurance: What It Is And How Does It Work?

Ask yourselves these fundamental questions about your business, and you will find yourself with a rough idea about your liability coverage limit!

Let’s start!

Q1. What is your business type?

Q2. What is the size of your business?

Q3. Who are your customers?

Q4. In which area is your business located?

Q5. What is the number of your employees?

Q6. What is the experience level of your business?

Q7. Where is the business housed?

Q8. Are you a sole proprietor?

Once you ponder all the above questions, you will be pretty much aware of the liability insurance coverage limits you will need.

Basically, the more risk you have, the higher limit you should have to support you.

Often, our business grows, but we do not rethink the coverage limits our business needs. Ideally, we should monitor our business operations and see where we need more coverage each passing year.

Also read: Do I need business insurance if I’m a sole proprietor?

So, this takes us to our next question: how do we boost our current policy for all our business challenges?

 

How To Upgrade Your General Liability Insurance Coverage?

The above introspection can give you a fair idea of your insurance needs.

And though general liability insurance coverage is comprehensive enough, it has its fallacies. Thus, you can add insurance policies for more comprehensive insurance coverage, also known as ‘endorsements.’

A few endorsements you can opt for are claims involving:

  1. Fire damage
  2. Liquor liability
  3. Employment practices
  4. Cyberattacks

Amongst others…

And in case you assess that your business is exposed to higher liability risks than what these policies can cover, Umbrella insurance is at your service!

Umbrella insurance is like a top-up above your existing policy, in layman’s words. It costs significantly less but amplifies your coverage limit to a considerable multiple.

But you don’t always need to step up. Sometimes you need to step down too. I mean that if you need lesser coverage than your current one. Or even starting afresh and need lesser coverage than buying a full-fledged liability policy, opt for a Businessowner’s policy!

A businessowner’s policy includes liability coverage within itself. It is ideal for low-risk businesses that do not want or need a separate liability policy.

But if you ask me, you should always spare enough for insurance, as it is like an investment if any adversity happens. It will pay off more than what it cost.

And this security is what makes insurance inevitable!

And that is why let’s see why we need general liability insurance in the first place!

 

Why Does Any Business Require General Liability Insurance Coverage?

It is simple. General liability insurance protects you from various very common lawsuits that you can easily land yourself into.

These lawsuits can drain your business and prove fatal for it.

Thus, every business should have some amount of liability protection. And below are a few businesses that can surely benefit from some liability insurance:

  1. You have a store, office, etc., open to your clients or even the public. (Bodily injury)
  2. You visit or work on or near your client’s property. (Property Damage)
  3. Your business has its active social handle and uses marketing and advertising channels. (Slander and Libel statements)

 

In A Nutshell…

General liability coverage protects your business from any unseen lawsuit and provides you the ultimate confidence to run your business and make it prosper!

It is not very costly, and if you have sporadic needs, you can also opt for short-term liability insurance! That will cost you even less! With this, I wrap up, and I hope the information was helpful and helped solve your query! And in case you have any queries or suggestions, please drop them below in the comments section! I am all ears!