Commercial General Liability Insurance
If business insurance were Thanksgiving dinner, Commercial General Liability Insurance would be the turkey. It's the starting point and centerpiece of any business's commercial insurance plan.
Like a Thanksgiving turkey, General Liability Insurance works best as part of a more complex setup, but without it, your coverage is incomplete. Read on to find out about the four types of coverage this policy offers and how much you can expect to pay for your policy.
What Is Commercial General Liability Insurance?
General Liability Insurance is the base layer of insurance protection for small businesses. It offers benefits that can pay for four different things:
- Lawsuits over third-party injuries & property damage
- Lawsuits over product liability
- Advertising injury lawsuits
- Immediate medical expenses for third parties injured on your business premises
If business insurance were Thanksgiving dinner, General Liability Insurance would be the turkey.
Let's explore how each of these types of protection might look in practice.
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Coverage for Third-Party Injury & Property Damage Lawsuits
When a third party (i.e., someone other than you, your employees, or your insurance provider) gets hurt at your business, they can try to hold you liable for the costs associated with their injury.
Here's an example: Say you own a clothing store and, on a rainy fall Saturday, a woman comes in, slips on a puddle you didn't notice, and breaks her leg.
After several visits to the doctor, she ends up with screws in her knee. She has to miss months of work while she heals. The medical bills are huge and she doesn't have the money to pay them. She sues your business to help cover the cost — after all, it was raining out. Why hadn't you mopped or put out "wet floor" signs?
Luckily, your General Liability policy is able to cover the cost of hiring a lawyer to negotiate and settle the case for the cost of her bills, plus the wages she missed. That's the third-party injury component.
To get an idea of the property damage protection a GL policy offers, imagine the same scenario, but the woman landed on her purse, smashing her $3,000 laptop.
In lawsuits over third-party injury or property damage, General Liability benefits can cover…
- Lawyers' fees.
- Court expenses.
- Judgments, if the case goes to trial and you're found liable for wrongdoing.
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Coverage for Immediate Medical Expenses
Now let's imagine that, instead of letting the injured woman hobble off on her own, you called an ambulance to make sure she received proper medical care. Because she didn't put all that extra weight on her leg getting home, the damage was less severe, she didn't need screws, and she was able to work again within two weeks.
Even better? Your Commercial General Liability Insurance covered the initial ambulance ride and related expenses.
Insurance companies know that it's often cheaper to pay a little money up front rather than a lot of money down the road. The immediate medical expense coverage included in a typical GL policy means business owners can take care of small problems before they become big ones, knowing that the insurance company can often foot the bill.
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Coverage for Product Liability Lawsuits
Not all customer injuries happen in your store, though. Imagine that a customer buys a pair of slacks and breaks out in a severe rash the first time he wears them. The medical bills are substantial, but the scarier thing is that the fabric could be causing rashes to everyone who bought them.
The customer sues you and the trousers' manufacturer. This is known as a product liability lawsuit.
The bad news: strict liability laws that exist in most states mean you could be held liable for the damage, even if it was entirely the manufacturer's fault.
The good news: Commercial General Liability Insurance policies typically cover product liability lawsuits.
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Coverage for Advertising Injury Lawsuits
"Okay," you're thinking. "I don't have a storefront. I don't sell products. I'm a service provider and I work from home. How can General Liability Insurance protect my business?"
One really neat feature of this policy is its advertising injury coverage. If a third party sues you for an advertising injury offense such as…
- Copyright infringement
- Defamation (including slander and libel)
- Invasion of privacy
…then your General Liability Insurance may be able to cover your legal costs.
This is particularly helpful in the age of social media and other types of online publication. Now that it's easier than ever to make public claims and share images, it's also easier than ever to be accused of defamation or copyright infringement.
Whether you're sued over a misinterpreted tweet or an image you didn't have the rights to post, your Commercial General Liability Insurance may be able to cover your legal costs so that they don't hurt your bottom line.
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What Commercial General Liability Insurance May Cover
General Liability Insurance may cover…
- Third-party injury lawsuits (including slip-and-fall).
- Third-party property damage lawsuits.
- Product liability lawsuits.
- Libel, slander, and defamation lawsuits.
- Copyright infringement lawsuits.
It does not cover…
- Professional errors.
- Employee injuries.
- Damage to your business property.
- Employee discrimination lawsuits.
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How Much Does General Liability Insurance Cost?
One of the things small-business owners are often relieved to learn is that General Liability Insurance is very affordable. Our most popular policy has a $1 million / $2 million limit (that is, up to $1 million in coverage for any single claim and up to $2 million in coverage for all claims in a year).
That policy costs $576.08 per year on average, with a median cost of $425.00.
For small, low-risk businesses, the cost may be even lower. In fact, nearly a quarter of our customers pay just $200 to $400 per year for their Commercial General Liability Insurance.
To learn more about the cost of General Liability Insurance, see our business insurance cost analysis.