When you purchase General Liability Insurance, you’re usually looking out for your own wellbeing. You’ve put a lot of time and money into your business, and you want financial protection when accidents threaten to destroy all that hard work. But can insurance help you out in another way? Can it help more than just you?
Clients and customers are looking out for number one, too, which means they want to work with businesses they can trust. When you have General Liability Insurance, you signal to these clients that they aren't taking a gamble by hiring your small business. You have the financial means to pay for accidents that your business may cause, such as property damage or bodily injuries to third parties.
So, yes, your insurance primarily protects you, but it can also protect your clients’ assets if your business accidentally causes them certain losses.
How General Liability Benefits Your Clients
Let’s take a look at what General Liability Insurance does. It offers coverage for third-party lawsuits over…
- Bodily injuries. Say that a client visits a worksite, but while he’s visiting, one of your workers drops a nail gun from the roof. As if it were in slow motion, you see the nail gun shoot off a nail, which lodges in the client’s hand. Ouch. Lucky it was only his hand, but ouch. That client sues and your insurance kicks in to cover the cost of the settlement.
- Property damage. While removing a tree from a client’s property, you misjudge the cut, but you don’t realize it until you’ve joyously shouted, “Timber!” The tree falls on top of the client’s car, leaving it slightly crushed and the client slightly furious. Your insurance can pay for the car’s repair or replacement.
- Completed products. You develop a toy metal shop called “My First Metal Shop” that sells out at Christmas at a local toy store. But a few days later, you get a call saying that the real sparks shooting from the toy angle grinder have caused serious burns on a number of kids. Yikes. It’s good that your policy's Product Liability coverage can address this claim.
- Medical expenses. You’ve just finished filming a short car chase scene for your independent spy movie. The producer’s wife visits the set but doesn’t see the grease slick in time. She slips and falls and breaks her wrist. Luckily, your insurance can cover the cost of the ambulance ride and her medical expenses. Hopefully, she likes the film enough not to sue.
- Advertising injuries. You do some work for a client, but later on at a bar, you get a few too many drinks in you and start telling all your friends about how much you hated the guy. You maybe exaggerate a few things about your interactions with him to get a laugh or two. Turns out, this rant produces a few rumors that get spread like wildfire. The client finds out you’re responsible for starting them, claims his business has suffered because of these rumors, and sues you for slander and defamation. You’ve got insurance to help pay for the settlement.
In all these cases, your General Liability policy not only covers you, but it also gives the client financial recourse. It’s better to not have an accident at all, but clients like to have assurance that if something does go wrong, you can make it right.
In the property damage example, consider what would happen if you totaled a client’s car and you didn’t have insurance. Say it was an expensive car, too. Would you have $60,000 on hand from your tree-removal business or personal savings to buy a new one? Most small businesses don’t have that kind of cash lying around.
Your General Liability policy can help protect your clients’ assets as well as your own. And by offering this protection, you’re likely to attract a lot more clients than you would otherwise. That’s a pretty sweet deal.
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