General Liability Insurance
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What does general liability insurance cover?

General liability insurance covers common lawsuits that arise from everyday business activities. It protects against customer injuries, damaged customer property, and accusations of defamation and copyright infringement.

General liability insurance provides coverage for:

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Third-party bodily injury
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Product liability
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Third-party property damage
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Advertising injuries

Third-party bodily injury

If a customer is hurt in an accident involving your business, general liability insurance can help pay for medical expenses. It also covers legal expenses if a customer sues over the injury.

Example: A customer trips over a carpenter’s toolbox and breaks a leg. The doctor's bills add up fast, so the customer sues to recoup his losses. Your policy can cover the cost of medical expenses, including the emergency room bill. If the customer refuses your assistance and opts to sue at a later date, your policy can help cover the cost of hiring a lawyer.

Third-party property damage

General liability insurance can cover expenses to repair or replace customer property accidentally damaged by a business.

Example: A general contractor backs his pickup truck into a client’s fence. Depending on policy limits, general liability coverage can pay for some or all expenses associated with replacing the damaged fence.

Product liability

Not all property damage or customer injuries happen inside a store. If a business manufactures, distributes, or sells products, it can be sued over the harm its products cause to people or property.

Example: A customer buys a container of a lawn care company’s organic fertilizer. After applying it to her lawn, she suffers a serious allergic reaction and misses three days of work. Blaming her illness on the fertilizer, she sues the lawn care business for lost wages. A general liability policy can typically cover the legal expenses associated with product liability lawsuits.

Advertising injuries (libel, slander, and copyright)

If someone sues a business owner or employee over slander, libel, or copyright infringement, general liability insurance can help pay for legal expenses.

Example: A maid at your house cleaning company tweets a rude comment about sloppy work done by a competing company. The tweet goes viral, and the owner of the competing business decides to sue for libel. Advertising injury coverage in general liability insurance can help pay for legal defense expenses and settlement or judgment costs when you're sued over advertising mistakes.

How much general liability coverage do I need?

If you are purchasing general liability insurance to fulfill the terms of a contract or lease, you need to make sure that your coverage meets the requested policy limits. The amount of coverage you need also depends on factors such as the size of your business, its industry risks, and the number of employees.

Most small businesses opt for the standard $1 million per occurrence / $2 million aggregate policy limits. This means the policy will pay up to $1 million to cover a single claim, with a $2 million limit for the lifetime of the policy (typically one year).

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General liability insurance does not cover:

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Professional errors
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Employee discrimination lawsuits
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Employee injuries
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Vehicles used by a business
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Damage to business property

Professional errors

Professional liability insurance, also called errors and omissions insurance, can cover lawsuits over professional mistakes, including undelivered services and missed deadlines.

Example: A real estate agent accidentally lists a house as having hardwood floors when it really has laminate wood flooring. After the home is sold, the homeowner discovers the error and files a lawsuit. Professional liability insurance could help cover the agent’s legal costs.

Employee injuries

Workers' compensation insurance is the policy that covers medical expenses, physical therapy, and some lost wages for employees.

Example: A cook at a restaurant gets splashed with hot oil and suffers third-degree burns. Workers’ comp helps pay for the emergency room bill and part of his missed wages while he recovers.

Damage to business property

A business owner's policy, which combines general liability insurance with commercial property insurance, can help cover the cost of replacing stolen business property. It can also pay for repairing or replacing business property damaged by fire or certain weather events.

Example: A fire at an office complex damages a tax preparation company. Commercial property insurance can help pay for replacement computers, equipment, and building renovation costs.

Employee discrimination lawsuits

Employment practices liability insurance (EPLI) can cover lawsuit expenses related to claims of harassment, discrimination, and wrongful termination.

Example: An employee at an engineering business files a lawsuit claiming partners are not assigning her to high-profile projects because of her ethnicity. An EPLI policy could cover legal expenses for the firm.

Vehicles used by a business

Personal auto insurance policies almost always exclude business use. Vehicles owned by a business must be covered by commercial auto insurance. Personal vehicles used for work purposes, along with leased or rented vehicles, can be covered by hired and non-owned auto insurance, which you can add to a general liability policy.

Example: An IT consultant driving his car to meet a client gets into an accident. His personal auto insurance policy won’t pay for damages, but a hired and non-owned policy would.

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