General Liability Insurance
What Is Commercial General Liability Insurance?
Commercial General Liability Insurance provides coverage for customer injuries, customer property damage, and lawsuits relating to both of these. It can help pay for immediate medical expenses as well as legal costs if an incident leads to a lawsuit. It's usually the first policy small-business owners purchase because they often need it to sign commercial leases and client contracts.
A General Liability policy can help pay for lawsuits over:
- Third-party bodily injuries.
- Third-party property damage.
- Product liability.
- Advertising injuries.
If customers, clients, vendors, subcontractors, or other non-employees sue you over the reasons listed above, the insurance company can cover the cost of the lawsuit, paying for:
- Legal teams to represent your small business.
- Witness fees.
- Evidence costs.
- The judgment or settlement (the final amount of damages you owe the other side).
It's tempting to think you'll never get sued, but lawsuits are part of the business landscape. And when a small business is sued, the costs can be devastating. A 2005 study [PDF] by the Small Business Administration found that a lawsuit costs between $3,000 and $150,000 for a small business. In today's dollars, that's closer to $4,000 to $190,000.
Commercial General Liability Insurance is an essential safety net when you don't have deep pockets because it can provide funding when things go wrong. Let's look at a few examples of the lawsuits this policy can cover.