Chapter 2: Understanding Small Business Insurance for Independent Consultants
Part 2: Basic Insurance Policies for Sole Proprietors & Independent Contractors
General Liability Insurance
General Liability Insurance (GL) is essential for marketing or management consultants who own or rent commercial property. That's because General Liability Insurance protects your independent consultancy from some of the most common third-party liability risks:
- Bodily injuries that occur on your property.
- Damage to others' property.
- Non-physical injuries, such as copyright infringement.
A "third party" can be anyone who doesn't work for your business. If your business is sued for a covered claim, GL can pay for your legal defense, settlements or judgments, and other court expenses up to your policy's stated limits. Most GL policies cover…
- Premises liability. This is one of the primary functions of a General Liability policy — protecting your property from premises liability. According to the National Safety Council , slips and falls account for approximately 8.9 million trips to the emergency room each year. And if one of these accidents happens on your property, you could be slapped with a lawsuit for the medical expenses. The prevalence of these suits is the reason General Liability Insurance is often called the "slip-and-fall insurance."
- Property damage. As a marketing or management consultant, you probably frequent your clients' offices for consultations to discuss the strategies you've suggested. But what would you do if you accidentally spilled coffee on a client's laptop while reviewing their new leads? You may not have the money on hand to replace their device and reimburse them for the time they lost because of your mistake. With General Liability coverage, you're covered if that client demands compensation for damages.
- Non-physical injuries. Consultants beware: if you advertise your services, you could be accused of advertising or copyright infringement. For instance, if you copy someone else's advertising or use someone else's image without consent, you could be sued for damages. If you run a blog, you are responsible for the content you publish. Perhaps another consultant happens upon your blog and decides you plagiarized the ideas on their website. They could sue you for infringement. Additionally, this portion of your GL can also cover lawsuits over libel or slander.
Slips and falls are responsible for 8.9 million emergency room visits each year.
If you run your consulting business from home, you may think your Homeowner's Insurance protects you from liability suits. However, most Homeowner's policies don't cover business liabilities. You may be able to add an endorsement to your policy to give you some commercial liability protection, but the limits are typically pretty low.
Your best defense against these common liabilities? General Liability Insurance. That way, when you need the big guns, you'll have adequate coverage for the claim. The cost of GL depends on your services, how long you've been in business, your claims history (if applicable), and your revenue. For specific estimates, apply for a free insurance quote online.
Next: Property Insurance