Commercial 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.
Commercial general liability insurance coverage protects your business against claims of property damage and bodily injury, covering your legal costs, associated medical costs, and eventual settlements. A standard CGL policy will also protect companies against liability claims related to advertising slander and product liability.
As a business owner, you likely engage with a lot of people throughout the course of your day. What would you do if one of them accused your business of injuring them physically, verbally or indirectly, and then decided to take legal action against you?
Unfortunately, this scenario plays out all too often, and it’s one in which not all business owners know how to act when it occurs. According to a recent study, general liability losses have been steadily rising over the last four years, with the combined ratio for U.S. carriers writing general liability being over 100%, reaching almost 108% in 2017.
Another study states that four out of 10 small and medium-sized businesses are likely to experience a property or general liability claim in the next 10 years.
If you find yourself in the position of needing to defend yourself and your business against claims of libel, physical injury, or other related claims, you need commercial general liability (CGL) insurance.
What is General Liability Insurance?
A commercial general liability 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 Needs Commercial General Liability Insurance?
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.
Commercial 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.
Why Do Businesses Need General Liability Insurance?
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 Doesn’t General Liability Insurance Cover?
Yes, 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 Practice Lawsuits: Once again, this is something that general liability cannot cover. However, the proper employee 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.
Highly-Publicized Examples of General Liability Insurance Policies at Work
- Starbucks and several other corporations were being sued in excess of $50,000 due to an incident in which a woman slipped and fell on liquid at the mall in 2015.
See: Slip Results In Lawsuit Against Starbucks, Others
- Property owners in several Ohio counties filed lawsuits claiming the construction of the NEXUS Pipeline has damaged their properties.
See: Homeowners file lawsuits against NEXUS for property damage
- A woman sued J. Alexander’s after she allegedly slipped and fell in the women’s bathroom while at the restaurant.
See: Woman Slips In Bathroom At J. Alexander’s In Boca, Sues
- The city of Detroit sued the owner of several McDonald’s locations for false advertising. The locations all had all the signs that said they were Green Light partners, but the city of Detroit said they were kicked out of the program and ignored demands to take the signs down.
See: Federal lawsuit accuses 4 Detroit McDonalds of using Project Green Light for false advertising
General Liability Insurance Costs
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).
Now that you understand the basics of commercial general liability insurance, you may be wondering how all of this affects your business and where to go from here. If you need more help or information you can reach out to our team of expert brokers.
If you prefer to get started on intelligent quotes, you can get started by creating an Embroker account today.
Having a quality commercial crime insurance policy in place and a broker who can help you navigate the terms and conditions as well as the the claims process can save you money and, more importantly, time.
Embroker is the easiest way to intelligently insure any business. We’re here to help!
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