General Liability Insurance 101

Alternatively referred to as business liability insurance, general liability insurance is one of the most important coverages a professional can purchase. It can offer protection in the event of third-party property damage or bodily injury caused by you or your employees. Considering the cost of a lawsuit — both financial and reputational — general liability an essential part of any professional’s insurance plan.

What Does General Liability Insurance Cover?

General liability coverage includes third party property damage and bodily injury, incidents that can happen during normal business operations. Third party property damage is typically considered unintentional destruction or damage to someone else’s property. For instance, if a piece of equipment drops and damages your client’s home during renovation, your general liability policy, or business liability policy can cover the costs associated with replacing or repairing the damaged property. Third-party bodily injury is when a customer injures themselves due to your negligence, on or off the premises. Say a customer trips over a toolbox, you can be held responsible for whatever medical bills or expenses related to the injury. Unless specifically excluded from your policy, general liability can cover losses related to claims of abuse and personal/advertising injury.

Common Misconceptions Regarding General Liability

General liability does not cover every kind of claim, especially when incidents happen within your business. Work-related injuries or illnesses sustained by employees is not typically covered by general liability insurance. Likewise, damage to your own business property does not fall under the protection of a general liability plan. Wrongful acts of professional error require a separate type of coverage as well. These business liability claims require separate coverages, such as workers’ compensation insurance, commercial property insurance, and professional liability insurance.

Why Do You Need General Liability Insurance?

Should you be found liable for bodily injury or property damage to a third party, general liability coverage can help with the costs associated with claim. This can include legal fees, monetary damages awarded to the injured third party, and whatever financial losses you incur while participating in your defense. Without general liability coverage, you would have to cover these costs out of pocket — which can potentially mean financial ruin.

Every business should acquire general liability coverage, especially those in the construction and contracting industry. Working with dangerous equipment, conducting business at a third-party location, bringing customers into their workplace make business liability insurance even more  important than usual.