General Liability Insurance

Embroker helps you get the right general liability insurance to protect your business against claims of property damage and bodily injury, covering your legal costs, associated medical costs, and eventual settlements.


What Is General Liability Insurance?

A commercial general liability (CGL) insurance policy provides indemnity against the risks that nearly all business owners face. It protects your business assets from any claims of injury related to your business and responds to claims of negligence made by a third party.

The court costs alone from even one lawsuit could be financially devastating to most growing businesses. Commercial general liability insurance can provide you with legal defense (per occurrence aggregate applies to settlements only) and with the resources to keep your business operating even in the midst of a lawsuit.

Most CGL policies also include some form of product liability coverage. This covers you if a customer claims that your product or service injured them in some way.

When speaking about liability in the context of a business, it refers to a company being in some way responsible for damages to a third party. And even if you didn’t do anything wrong, your business can still get tied up in a messy court case and lose a lot of money defending itself before your innocence is proven.

Commercial general liability insurance was created to protect businesses from loss if the business is ever found legally liable for any damages to third parties. Essentially, the product or service that you provide could be held responsible for the property, bodily, and other damages incurred by a third party.

CGL coverage will help your business to mitigate losses in such situations.

Who Is Commercial General Liability Insurance For?

insurance agent vs. broker cover

If you are a business owner who deals with and employs other people in some way, you need commercial general liability insurance. Even if you think you’re unlikely to face a lawsuit, insurance is always a wise (and fairly affordable) investment. Few people regret buying insurance but many people regret not buying it.

General liability insurance is absolutely for everyone, not just big businesses. Even if you are working as an independent consultant, contractor, or tradesperson you should have this type of coverage.

As a business owner of any type, you have enough to worry about. Business general liability insurance can give you peace of mind by helping you manage your business risks.

The type of coverage you need depends on your industry, so it’s important to talk to someone who understands your industry and your business’s specific needs.

When Do You Need CGL Insurance?

Most businesses should start looking into purchasing some type of general liability coverage right away, as soon as they are founded. The reason for doing it right away is not just because you should be protected from the start, you can also be asked to show your proof of coverage when signing contracts with larger companies, signing office leases, and even applying for a professional license to work legally.

Having general liability coverage offers reassurances to companies and clients that are interested in working with you and shows them that your finances are fairly secure.

Clients and businesses want to work with companies that are secure and stable, not with companies that could go bankrupt as the result of one liability lawsuit, which is exactly what could happen to any burgeoning business that gets sued without having purchased coverage beforehand.

How Do You Apply for CGL Insurance?

When you are applying for commercial general liability coverage, the insurer will want proof of the fact that investing in your business is not a risky proposition.

Before you get the insurance, the prospective insurer will no doubt look at your business’s past history of claims and evaluate the type of products or services that you provide to determine what potential threats and risks exist in your line of work.

Generally, you’re not going to get a lot of pushback, and getting a CGL policy should be no problem unless your business poses a very obvious and serious risk to you and your customers. But unless you’re giving tightrope-walking lessons with no safety net, you should be able to get the right CGL coverage easily. You can get an instant general liability insurance quote in just a few minutes with Embroker.

Is General Liability Insurance Required By Law?

You are not required by law to carry general liability insurance. However, keep in mind that local governments will typically require that you have a GL policy to be issued a business license. Additionally, most venues and office spaces require that you carry liability insurance.

How Do I Get Proof Of General Liability Insurance?

If you need to get proof of insurance, there are a few steps to take.
First, you’ll need to talk to the client or the entity requesting the certificate and determine what minimums and limits they require. Get your client’s name, address, and tax identification number as well if you have to increase your premium. After that, you can contact your broker or insurer and request the certificate.

If you need to purchase additional insurance or expand your policy to ensure that your insurance fits the project, your broker will walk you through the process and help you take care of the paperwork. Once this process is over, your broker can create a certificate of insurance and send it over.

Why Do You Need It?

The simplest answer to this question is “because people like to sue each other.”

A suit can be filed against your business for just about anything. It can be a claim of bodily injury, damage to property, or even libel and slander. CGL coverage can protect you if you are sued, help you pay for the legal fees associated with fighting the charges, and even with the money you need for a settlement if you don’t want to deal with the court case.

There are several obvious reasons, societal trends, that show us that general liability is needed now more than ever. One of them is violent events, especially the recent rash of shooting incidents across the country, with more than 50 percent of these tragic events over the course of 2016 and 2017 occurring in either commerce, government, or educational environments.

The importance and dominance of technology in today’s society and the concept of a shared economy with businesses collaborating more and more are also two things that are blurring the lines when it comes to liability and trying to figure out the right type of coverage for your business that is going to protect it thoroughly.

What Does General Liability Insurance Cover?

CGL insurance covers third-party lawsuits that stem from property damage or injuries. Here is a closer look at some of the most common types of situations in which this coverage will help your business:

  • Bodily Injuries: Depending on your business, you may have a hard time imagining a situation in which a customer could be seriously or fatally injured, but it could happen. If it were to happen, your general liability insurance covers any related medical costs.
  • Property Damage: It is possible that the actions or inactions of your business could cause damage to another person’s property. In this scenario, your general liability insurance would compensate both the damage and any loss of use.
  • Operational Costs: If your company produces products then general liability insurance covers any injuries that could occur as a result of that process.
  • Personal Injury: You could find yourself in a situation in which someone claims you personally injured them in some way. Your general liability insurance would protect you against any lawsuits involving claims of libel, slander, violating another person’s privacy rights, or unlawfully evicting someone.
  • Product Liability: Not every damage or injury occurs in-store. If you are creating and selling products or services that are distributed, you can be sued if those products damage a person’s property or cause bodily injuries no matter where they are at the time.
  • Legal Expenses: if your company were to be sued, the costs associated with hiring a legal team and defending yourself in court can be huge, even if the lawsuit is ultimately unsuccessful. A lawsuit can also damage your reputation and hinder revenue. General liability insurance would pay for all the court costs, possible loss of income, and settlements resulting from the suit.

What’s Not Covered?

There are some things that your commercial general liability insurance will probably not cover, with the following being some of the most common examples:

  • Employee Injuries: Staff injuries are not covered by general liability insurance. For this type of coverage, you should be looking into workers compensation insurance.
  • Professional Errors: You can’t depend on your general liability policy to cover you if you’re sued for failing to uphold a professional standard of care – that’s what your E&O insurance is designed to cover. For example, if you were contracted to get someone’s website up and running by Black Friday and you didn’t, your client could sue you for losses because he or she was not able to sell products during a peak online shopping season.
  • Employment Practices Lawsuits: Once again, this is something that General Liability cannot cover. However, the proper employment practices liability insurance (EPLI) coverage will help you deal with these types of issues if they do occur.
  • Property Damage: Another type of insurance exists for this. If you want to protect your commercial property from theft, fires, or any other weather-related damage, you should be looking to purchase commercial property Insurance and specific policies like fire insurance coverage.

Difference Between Professional And General Liability Policies

A general liability policy is not a replacement for a professional liability policy and vice versa.

The main difference lies in the types of risk they cover. General liability will provide protection if your business is held liable for injury or property damage arising from your daily operations. A professional liability policy protects the company from claims related to professional services or advice. This includes claims of negligence, professional errors, malpractice, and misrepresentation.

What Does General Liability Insurance Cost?

One of the biggest factors that determine the cost of general liability insurance is your specific industry and business. If you’re a freelance contractor who works from home, chances are you interact with far fewer people than a convenience store owner. In general, the construction industry tends to pay some of the highest rates for insurance because they usually do work on other people’s properties.

Your business is unique and your coverage needs are as well. The types of services you offer, how many employees you have, and the types of risks your customers face all contribute to the cost of your premiums. If you want a general liability insurance policy with a high coverage limit then you should expect to pay more for it.

According to research performed by Liberty Mutual, the largest expenses associated with GL claims today are legal fees, adding that there are several litigation trends that are actively contributing to higher claims costs, including litigation funding (outside investors fronting legal fees in exchange for a percentage of the potential settlements of judgments), traumatic brain injuries (an increased number of plaintiffs’ lawyers alleging traumatic brain injuries at the onset of claims), and escalating verdicts (larger trial verdicts).

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Norman Serranom

Cape Productions, Inc.

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