The easiest way to understand how General Liability Insurance protects small businesses is to look at a bunch of examples of this insurance policy in action. We'll do that in one second. First, let's review the basic facts about what this policy covers:
- General Liability Insurance pays for lawsuits when you're sued by third parties, which is the legal term for people not employed by your company.
- GL coverage pays for lawyer's fees, court expenses, and damages owed to the party who sued you.
- Covered lawsuits include claims about property damage, bodily injuries, advertising injuries, reputation damages, copyright infringement, slip-and-fall accidents, and other common lawsuits.
- Employee injuries are not covered by GL, but are covered by Workers' Compensation Insurance.
- Some policies also cover immediate medical costs — ambulances, emergency room fees, etc. — for people injured on your property.
Examples of General Liability Insurance Protecting Small Businesses
Now that we've got a handle on the basic coverage aspects of General Liability Insurance, lets look at some examples where this insurance can save you a lot of money.
- Property damage lawsuit. A contractor is installing a new kitchen. Unfortunately, one of his co-workers forgets to shut off the water and floods the kitchen. The water seeps into the floors and the walls of the finished basement. The homeowner sues them for $200,000 in damages to their house.
- Slip-and-fall accident. A restaurant is sued when a produce deliveryman slips on the wet floor of the freshly mopped kitchen. Tomatoes go flying everywhere, but the real damage is done to the deliveryman's shinbone, which he breaks smashing it into a table. He sues the restaurant for $100,000 in medical costs, lost wages, and other expenses.
- Customer injury lawsuit. A photographer is shooting senior photos for a client. As the family walks into the studio, the mother trips over the cord for the flash and falls to the ground, breaking her collar bone. The family sues the photographer for $75,000 in medical damages.
- Product liability lawsuit. A sporting goods distributor is sued for $500,000 when a jungle gym they sold breaks and injures a customer's child.
In each of these examples, the insurance company would cover the cost of the lawsuit, paying for a lawyer to represent the company and covering the final judgment or settlement in the case. The judgment is when the judge or jury rules on a dollar amount you owe the party suing your business.
However, some cases are resolved before that point. Settlements occur when both parties voluntarily agree on an amount of damages out of court.
One of the benefits of having insurance is that the insurance company often helps small businesses settle their lawsuits. The insurance company can pay for a settlement, which will help you avoid wasting time (and more money) in the courtroom and get you back to business.
Want More Info on Liability Insurance? Get Free Insurance Quotes
For a free insurance quote, contact one of our insurance agents. They will customize a quote for your business, making sure your General Liability Insurance fits your business's needs. For example, if you sell products that can injury your customers, our agents will make sure your policy has adequate product liability insurance. If you run a storefront, we'll make sure you have slip-and-fall coverage.
Whatever coverage your business needs, our insurance agents will send you a free, no-strings-attached quote on General Liability Insurance or other small business insurance policies.