A new survey of 1,000 small businesses conducted by Hiscox found that 75% of these firms are underinsured, while 70% don’t understand what commercial insurance covers, including a General Liability (GL) policy.
According to Hiscox, the majority of small business owners do not know what basic insurance policies cover, with 71% not understanding what a BOP covers and 83% failing to correctly describe General Liability insurance. Moreover, 35% of those surveyed do not have General Liability insurance. Additionally, of the small businesses that have been operating for 10 years or more, 39% have never updated their General Liability policy.
Following is an overview of General Liability insurance and why businesses should purchase this coverage. We invite you to share this information with your clients and prospects.
Inside a General Liability Policy
General Liability insurance provides coverage for the following.
- Bodily Injury: Pays for medical expenses, legal expenses, and potential settlements or judgments if someone is injured on your premises or as a result of your operation. For example, if a customer slips and falls at your restaurant, is injured, and sues you for your negligence, General Liability insurance provides coverage up to the policy limits.
- Property Damage: Covers damage to other people’s property caused by your business operations. For instance, if one of your employees accidentally damages a client’s property while providing a service, this portion of the policy will cover the cost of repairs or replacement.
- Medical Payments: Provides coverage for minor medical expenses incurred by individuals who are injured on your business premises, regardless of fault. Having this coverage can help prevent minor incidents from turning into larger liability claims and attorney involvement.
- Personal and Advertising Injury: Protects against claims of libel, slander, copyright infringement, or false advertising in your advertising and marketing materials. For example, the GL policy will help cover your business if you make unintentional false claims about a competitor or if you use another firm’s logo or slogan without permission.
- Products and Completed Operations: Covers claims related to products you’ve manufactured or sold or services you’ve provided after they have been completed. It can cover legal expenses, settlements, or judgments arising from alleged defects, injuries, or damage caused by your products or services.
Why Purchase General Liability Insurance?
General Liability insurance is an essential component of a business’s risk management program and long-term viability and success. Here are several reasons why a business should buy a GL policy.
Without General Liability insurance, a $1 million or $2 million lawsuit or claim could bankrupt your company. A GL policy provides a financial safety net to help handle unforeseen liability costs and protect your business assets.
General Liability insurance covers legal expenditures such as attorney fees, court costs, and settlements or judgments if your company is sued for bodily injury, property damage, or personal/advertising injury. This safeguard can be critical in defending your company against allegations or lawsuits – even when allegations are meritless.
Before signing on the dotted line, many clients, vendors, or business partners will require you to acquire General Liability insurance as part of your contractual agreement. A third party will often request a Certificate of Insurance showing evidence of General Liability insurance. Contractors, for example, when bidding on a project, must demonstrate proof of insurance, including the limits they carry.
Peace of Mind
Knowing you have insurance to cover potential liability issues provides peace of mind so you can focus on running and growing your business without worrying about the financial ramifications of unforeseen accidents or incidents.
Having General Liability insurance can improve your firm’s credibility and reputation. It communicates to customers, clients, vendors, and partners that you are a responsible and reliable entity, which can aid in attracting and retaining business connections.
Our General Liability Programs
ISC offers several exclusive General Liability programs to our broker partners, including for the construction, hospitality (includes Liquor Liability), trucking (Non-Trucking Liability), and entertainment industries. You can also access a BOP policy through our partnership with Hiscox that combines General Liability and Property insurance for small businesses and a Commercial Package Policy through AU Gold for small to mid-sized businesses.
*NOTE: The insuring agreement in a policy sets out the covered perils, assumed risks, and nature of coverage that the insurance company provides to its insured in exchange for the premiums paid. Thus, the terms and conditions of the policy will dictate whether coverage exists and the nature of any potential benefits.