According to SBA, general liability isn’t a luxury; it’s an essential policy for business owners. General liability insurance can save your enterprise in case of property damage, bodily injury on your premises, or damage resulting from your business operations. Here is what you need to know about small business general liability insurance.
What to Know About Small Business General Liability Insurance?
Small business general liability policies protect businesses against third-party claims related to physical injury. For instance, your general liability can cover the medical expenses if a customer is injured in a slip and fall accident while on your property. General liability insurance can also cover financial expenses that come with civil court actions, including
- Legal expenses
- Settlements agreed upon by the defendant/insurer and plaintiff
- No-monetary losses (like personal distress or pain and suffering)
- Compensatory damages (payment to replace the damaged or lost item)
- Punitive damages (payment on top of compensatory damages to penalize the defendant and deter similar behavior in the future.)
General liability insurance also covers property damage claims. So, on top of paying for the medical costs of the customer injured on your premise, your general liability will also cover the cost of replacing the customer’s smartphone that was damaged when they slipped, fell, and sprained an ankle in your company’s parking lot.
If yours is a small business that leases business space, your general liability insurance can also cover damage to that rental property resulting from weather or fire. Your policy may also cover copyright infringement and advertising damage claims. Some general liability insurers offer digital data storage coverage, but this typically is added to the policy at an additional cost.
What Does Small Business Liability Insurance Not Cover?
General liability insurance offers umbrella coverage for damage sustained by third parties (individuals and entities outside your business). If an employee is injured at work, your general liability policy won’t cover the liabilities resulting from that incident. Small business general liability insurance excludes bodily injuries and property damage for individuals working for the business, including the business owner. While your policy may cover damage to your rented property, it won’t cover damage to business-owned property. Common exclusions include:
- Damage to business-owned vehicles. To cover your business vehicles, you need commercial auto insurance.
- Medical costs resulting from car accidents involving the business owner or employees
- Employment disputes
- Professional errors and omissions
- Business interruption due to government-declared or natural disasters
- Business interruption due to employee injury or sickness
What Types of Enterprise Benefits from General Liability Insurance?
Businesses of any size can benefit from carrying general liability insurance. As a small business owner, your policy can protect you from the financial consequences of being sued successfully by a plaintiff. Lawsuits can drain your business’s finances and even your personal finances.
How Much General Liability Insurance Does a Small Business Require?
The amount of general liability coverage small businesses should get depends on multiple factors, including the level of risk exposure, budget constraints, and the business’s insurance risks. A small business that faces significantly high risks for bodily injury claims, such as gyms, or businesses located in an area that gets icy or snowy, should consider getting more coverage. Conversely, if your business doesn’t have a physical space, you face reasonably low risks of bodily injury claims, and therefore, you can get a relatively lower level of coverage.