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General Liability Insurance
There are things over which you have little to no control in business. Even if you think you have eliminated all the risks and hazards, you still can be sued for accidents, injury or property damage that might happen on your business' premises; exposures associated with your products, borrowed equipment or you may have to deal with contractual liability.
General Liability Insurance is essential for most companies since it protects the assets of a business in case it is sued for causing a bodily injury or property damage to a third party. There are cases when businesses are faced with devastating claims for medical expenses accruing to the incident, the cost of defending lawsuits, and judgments required during an appeal procedure. General Liability Insurance will pay on your behalf for damages which you are liable for up to your policy limits, legal defense in addition to your policy limits, and some supplementary payments, such as investigation expenses.
The amount of liability coverage a business needs depends on such factors as risks associated with this or that type of business and the state where the business operates. To set an example, manufacturers of medicine and manufacturers of soft toys would have different liability insurance levels. Also, if your state is known to have awarded high damage amounts to plaintiffs, your business needs higher liability coverage limits.
General Liability coverage will pay the insured in case of bodily injury for the cost of care; the loss of services; and restitution for any death that results from the injury. In case of property damage, General Liability coverage will compensate the property owner for the physical damage to the property or the loss of use of that property.
If someone was accidentally injured at your business site (e.g. a customer fell on your premises and had to seek medical aid), General Liability coverage will compensate medical (and/or funeral) expenses incurred within one year of the accident up to your policy's limits. However, mind that your General Liability policy won't cover any damages in case your employee sues you for an injury you presumably caused. You will need Workers' Compensation policy to have this protection.
Besides physical harm to a person your business might accidentally cause, there may be lawsuits arising from some personal injury. A General Liability policy will cover you in case you are accused of publishing inaccurate information that libels an individual or organization; publishing material violating someone's right of privacy; falsely arresting, detaining or imprisoning a person; maliciously prosecuting or wrongfully evicting someone.
General Liability coverage also extends to contractual liability, which means that it will protect you if you are involved into some types of contracts, for example, a building lease; some license agreement; an elevator maintenance agreement etc.
General Liability normally includes liability protection for your company's completed products or services, which means that in case your company's products or services were found at fault and caused some injury or damage to a person, your policy would pay for the damages, any legal expenses up to your policy's limit and in addition to your policy's limit, defense costs, regardless of who was at fault.
No matter whether or not your company is legally responsible for some claim filed against you, you may have to face substantial defense and court expenses. Your General Liability policy will help you pay for any defense costs incurred directly by the insurance company, such as attorney's fees, witness fees, and police reports; any court costs and other costs associated with a legal suit; expenses your assistance in your defense may involve (for instance, loss of earnings for the day when you have to testify in court); the premium for any bond the court requires etc.
General Liability policy will also offer liability protection in case you are ever sued for causing some advertising injuries that is, for something that happened while advertising your company's goods, products or services. Advertising injuries may result from publishing inaccurate information which a person or organization considered as a slander or libel; copying some other company's advertising ideas; infringing on another company's copyright, title, style, slogan or another intellectual property; publishing material that violates a person's right of privacy, malicious prosecution, wrongful eviction.
General Liability Insurance plan may include coverage for fire, lightning or explosion damage. Also, liability protection may be applied to other parts of the business property you own or rent that may be damaged due to your negligence. For instance, your Liability policy will cover the flood damage you have caused to your neighbor's office.
General Liability policies are likely to include Hired Auto & Non-Owned Auto coverage as an endorsement. Hired Auto coverage enhances or replaces the liability coverage offered by auto rental agencies. Note, however, that you should still obtain physical damage coverage from the rental agency in case you have a car rented in your company's name.
In case the lawsuit results from an accident that you or your employee has in a personal car while on business trip, Non-Owned Auto coverage will provide protection to your company. However, only your Personal Auto policy will protect you or your employee personally in the case of auto accident.
The General Liability policy will also protect you in case someone claims you are legally responsible for a liquor-related accident though your company is not associated with alcohol. For example, you would be covered if you distribute alcoholic beverages on occasions like a holiday office party.
The General Liability policy provides liability protection to a number of people involved in your business. For example, your employees would be covered while they are acting in their capacity as employees. In case your business is a partnership or joint venture, General Liability policy would cover all partners and their spouses if they are sued for something they did while acting in an official capacity for your business. In a corporation or association, all executive officers, directors, and stockholders would also be afforded liability coverage under this policy while acting in their official capacities. Then, any person or organization with whom you have a written agreement to indemnify would be covered against liability claims for any bodily injury or property damage which may result from distributing or selling your products.
Your legal representatives would be protected under this policy for any liability arising from the use of your property in their care. Liability coverage would also be extended for any volunteers who act for your business under your directions and within their area of responsibility. Your policy would also protect any subsidiary for which you own more than 50% of the voting stock and any newly acquired organization for 90 days to newly acquired companies.
Under a General Liability Insurance policy, the insurance company will pay the legal costs of a business in covered liability claims or lawsuits. Punitive damages are considered to be punishment for intentional actions and are not covered under General Liability Insurance policies. As soon as an accident potentially leading to a liability claim has taken place, the policyholder must report it to the insurance company and then assist in the investigations.
General Liability Insurance policies always list a maximum amount that the insurer will pay during the effective period of the policy and the maximum amount the insurer will pay per occurrence. In case your business company has a $1 million occurrence cap in the liability policy and is sued for damage of $1.5 million, the insurer would pay $1 million and your business would be liable for paying the rest $500,000.
In order to cover such situations and ensure extra protection, many business companies choose to purchase Umbrella Liability Insurance. Umbrella Liability covers payments that exceed the company policy's limits, and provides additional coverage for liabilities which Standard Liability Insurance policy fails to cover.
General Liability Insurance has quite a number of exclusions. Therefore, it is vitally important to carefully read your policy and understand what your policy coverage does and doesn't include. General Liability and Property package policies don't protect your business from professional errors or negligence and you will need Professional Liability Insurance policy to be covered. In case you have some specific concerns, additional liability policies selected according to your needs, such as Errors and Omissions Liability Insurance or Directors and Officers Liability, will be most helpful.
Commercial General Liability (CGL) policies offer coverage for four types of claims, including bodily injury, property damage or loss, personal injury (slander or libel), and advertising injury. This coverage may also extend to theft or destruction of your company's computer hardware, software and other assets and equipment up to a specified amount.
Commercial General Liability is usually offered in a package with Property coverage and makes the basic type of commercial insurance. One can purchase General Liability Insurance separately or as part of a Business-Owner's Policy (BOP), which combines Property and Liability Insurance into one Business Insurance policy for better business coverage at lower rates.
However, not every business can be eligible for BOP coverage. For example, if a company is involved in high-risk activities, occupies large premises or manages most services off-premises, it is most likely to need higher liability limits than BOP packages offer. For some businesses the single limit in the BOP will be an adequate coverage, but for businesses with higher liability risks, the fixed limits of a BOP may be insufficient. Businesses that need substantial coverage should consider buying Liability Insurance as a separate policy, as BOP may have rather low liability limits.
It pays to take certain steps to lower the risks of liability insurance claims and keep your insurance rates down. For instance, enhancing product quality control, keeping company records up-to-date, making sure employees are properly trained, talking to peers and making your own industry research will help you get an insight into your business needs and get the best available coverage and rates. You are also recommended to review the recent legal actions and settlements in your business field. It is important to determine the average legal costs in order to set your coverage limits.
Research Commercial Insurance policies online and contact several insurance agents to be able to compare insurance quotes and select the most appropriate coverage answering your business' needs. It is a wise idea to find an insurance broker who knows your industry well and is able to give expert recommendations based on knowledge and experience.