General liability lawsuit examples

Before we look at specific lawsuit examples, let's take a closer look at the types of expenses that general liability insurance covers:

• Lawsuits when you're sued by third parties, which is the legal term for people not employed by your company
• Lawyer's fees, court expenses, and settlements or damages owed to the party who sued you.
• Damage to a third party's property
• Some policies also cover immediate medical costs – ambulance rides, emergency room fees, etc. – for people injured on your property.

There are limits to general liability coverage. For example, the policy doesn’t cover employee injuries, which something workers' compensation insurance addresses.

Now that we have a handle on the basic coverage aspects of general liability insurance, let’s look at some examples where this policy can save you a lot of money.

A contractor is installing a new kitchen. Unfortunately, one of his co-workers forgets to shut off the water and floods the kitchen. The water seeps into the floors and the walls of the finished basement. The homeowner sues them for $200,000 in damages.

A restaurant is sued when a produce delivery man slips on the wet floor of the freshly mopped kitchen. The produce is destroyed in the fall, but the real damage is done to the delivery man's shinbone, which he breaks smashing into a table. He sues the restaurant for $100,000 in medical costs, lost wages, and other expenses.

A photographer is shooting senior photos for a client. As the family walks into the studio, the mother trips over a cord and falls to the ground, breaking her collarbone. The family sues the photographer for $75,000 in medical damages.

A lawn care company sells a bottle of organic pesticide to a client. While applying the pesticide, the client accidentally inhales the vapors and suffers a severe allergic reaction. The client sues the lawn care company for $100,000 in medical costs and other damages.

In each of these examples, the insurance company would cover the cost of the lawsuit up to the general liability policy limit, paying for a lawyer to represent the company and covering the final judgment or settlement in the case. The judgment is when the judge or jury rules on a dollar amount you owe the party suing your business.

However, some cases are resolved before that point. Settlements occur when both parties voluntarily agree on an amount of damages out of court. One of the benefits of having insurance is that the insurance company often helps small businesses settle their lawsuits. The insurance company can pay for a settlement, which will help you avoid spending time (and more money) in court.

Complete Insureon’s easy online application today to compare general liability insurance quotes from top-rated U.S. companies. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.