What does general liability insurance cover?
General liability insurance can cover expenses related to non-employee injuries that happen at your property, damage you cause to someone else’s property, libel, and slander. In other words, it can cover some of the most common lawsuits that arise from everyday business activities.
If your business is sued and the lawsuit is covered by your general liability policy, your insurance can help pay for legal expenses, including attorney's fees and settlements.
General liability insurance provides coverage for:
Third-party bodily injury
If a customer is hurt on your property, general liability insurance can help pay for immediate medical expenses or legal expenses if they sue your business.
Example: A customer slips on a freshly mopped floor and breaks his leg. The doctor's bills and time off work add up fast, so the customer sues to recoup his losses. Your policy can cover the cost of your customer's immediate medical expenses, such as the ambulance ride and emergency room visit. If a customer refuses your assistance and opts to sue at a later date, your policy can help cover the cost of hiring a lawyer to negotiate and settle the case or take it to trial.
Third-party property damage
General liability insurance can cover expenses to repair or replace customer property that is damaged at a business.
Example: An employee accidentally spills coffee on a client's $3,000 laptop, making it inoperable. Depending on policy limits, business liability insurance can cover some or all expenses associated with replacing the damaged laptop.
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 those products cause to people or property.
Example: A customer buys and eats a store’s signature salsa. Shortly after, she falls seriously ill and misses three days of work. She thinks the salsa is to blame, so she sues the salsa business for lost wages. General liability policies can typically cover the legal expenses associated with product liability lawsuits.
Libel, slander, and copyright (advertising injury)
If someone sues a business owner or employee over slander or copyright infringement, general liability insurance can help pay for lawsuit expenses.
Example: An employee at a photography studio jokingly tweets that the owner of a competing studio is guilty of tax evasion. The tweet goes viral, and the owner of the competing studio decides to sue for libel. Advertising injury coverage in business liability insurance can help pay for legal defense expenses and settlement or judgment costs when you're sued over advertising mistakes.
General liability insurance does not cover:
Professional liability insurance can cover lawsuits over professional mistakes, including undelivered services and missed deadlines.
Example: A web designer fails to deliver a website redesign project by the date specified in her contract with a local retailer. This causes the business to miss projected sales goals during peak online shopping season. The store’s owner decides to file a lawsuit over lost revenue.
Workers' compensation insurance is the policy that covers medical expenses, physical therapy, and some lost wages for employees.
Example: A part-time employee at a physical therapy business slips on a wet floor and injures his back. Workers’ comp can help cover medical expenses and lost wages.
Business property damage
Commercial property insurance can help pay for expenses to repair or replace your business property when it's damaged by fire, theft, and some weather-related events.
Example: A fire damages a bakery’s storefront and kitchen. Commercial property insurance can help pay for repairs to the building and replace damaged culinary equipment.
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 a boutique architectural firm 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.