Ask any business owner what their worst business nightmare is, and they’ll probably answer with something pertaining to catastrophic financial loss. Robbery, theft, environmental property damage, employee injury, etc. These tragic events occur all too often in the business world, which is why you need business insurance (whether you like it or not).
How do you know which type of business insurance is right for your company? While the answer to this question depends on several factors, it’s safe to say that you most likely need what’s known as general liability insurance. This type of business insurance protects your company from third-party legal actions (i.e. lawsuits).
Ever thought about how you would pay for a lawsuit (out-of-pocket)? For the large majority of businesses, paying for a lawsuit out-of-pocket just isn’t realistic. This is why general liability insurance is necessary (no matter what type of business you operate).
General Liability Insurance Defined
General liability insurance for business isn’t just something that’s nice to have (but not required). On the contrary, this type of insurance policy is 100% vital to the secure protection of your business. General liability policies protect businesses from numerous types of legal claims (e.g. property damage, personal injury, advertising injury, reputational harm, etc.).
Most liability policies offered by the leading insurance companies provide coverage for the following:
- Personal injury – e.g. a customer gets injured at your business’s location and decides to file a lawsuit against the company.
- Property – Damages to property are also included in most liability policies. An example of this type of coverage would be someone suing you for damage that occurred on your business’s property.
Reputation harm – An example of this kind of coverage could be a competing company filing a lawsuit against your business for reputation harm.
Although the above list isn’t even close to being exhaustive, it’s an overview of some of the more common coverages offered by popular insurance providers. Different providers (and different policies for that matter) will have different types of coverages available to purchase.
Why You Need General Liability Insurance
Whether you like it or not, owning a business comes with an inherent risk (e.g. the risk of failing, the risk of property damage, the risk of customer lawsuits, etc.). This is why companies both big and small nearly always have some form of liability insurance.
But why does that matter to you? Imagine if your company had a lawsuit filed against it (and you didn’t have insurance). Do you know what would happen? Your company would rack up thousands upon thousands in legal fees (and that doesn’t even include having to pay for the third party’s lawsuit either).
General liability insurance was created for the protection of businesses against lawsuits and similar legal actions. Although this kind of insurance isn’t typically required by law it is required by good business sense. Instead of thinking of adding a GLI policy as another bill to pay, think of it as an investment for the protection of your company.
How Much Coverage is Right for My Business?
How much coverage a particular policy allows your business is one of the most important factors in choosing which policy to purchase. While it’s true that picking the right insurance provider for your company is important, it’s also important to choose a policy that has the right amount of coverage for your business’s specific needs.
How to determine the amount of coverage you need depends on several different factors. When an insurance company offers you a quote, they take the following into consideration:
- The size of your business
- The location of your business
- How long your business has been in business
- How many people you employ
- How much revenue you generate
You should also keep the above list in mind when thinking about how much coverage you need. By thinking about the aforementioned factors, you’ll be able to accurately estimate exactly how much coverage your business requires.
Most policies guarantee a typical small business up to one million dollars in coverage (per one event or “occurrence”). That means that your business can receive up to one million dollars in coverage if you need to use your liability policy/file a liability claim. It’s important not to choose the wrong level of coverage. Whatever your coverage limit is, that’s the exact amount that the insurance coverage will pay up to (and not a dime more). Any leftover costs would be relegated to your business (i.e. you would be required to pay everything else).
Hey, I am Raj. I am the owner and content publisher at Financenize. I have completed my education till intermediate school and after that turn to a full-time blogger and content writer. I usually share the quality information for the readers in Financenize, which helps the small business, individuals and entrepreneurs and the information I share makes their task more manageable. I am expert in analyzing the current situation and deliver a profitable period to the extent. You can find me on various social media handles online.