A general liability insurance policy covers common business risks such as customer injuries, damage to a customer’s property, and advertising injuries. It’s often one of the first policies bought by a new business owner.
Before we look at specific lawsuit examples, let's take a closer look at the types of expenses that commercial general liability insurance covers:
You may sometimes see general liability insurance referred to as public liability insurance. Small business owners can often save money by bundling this coverage with commercial property insurance in a business owner's policy (BOP).
Your claim would typically be handled between yourself and the insurance company, and could involve an insurance adjuster examining your claim. Insurance claims can sometimes involve a lawsuit, such as when someone sues your business for damages.
A lawsuit is a demand for compensation that an injured party files against you in court, ultimately seeking monetary damages. If you have the right type of insurance, your insurance company would likely cover your court costs, attorney’s fees, and any settlement—up to the coverage limits of your policy.
Depending on your policy, your insurance company might provide its own lawyers to work on your behalf.
In every industry, small business owners are vulnerable to lawsuits when they work with clients and customers, or when they run an advertising campaign. Even a frivolous suit can be expensive to defend against, which is why insurance is always a wise investment.
Most general liability lawsuits fall into one of the following six categories:
A photographer is shooting 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 then sues the photographer for $75,000 in medical damages.
An appliance installer is working on 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 then sues them for $200,000 in 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. Subsequently, the client sues the lawn care company for $100,000 in medical costs and other damages.
A house cleaning company runs a social media campaign in which an employee makes a disparaging comment about a competitor's work. The competing business files a lawsuit claiming that its reputation was damaged, and demands compensation.
A food manufacturer is sued by a competitor who claims that it copied a trademarked cartoon image on its packaging. The competitor asks the court to stop the manufacturer from using the image and seeks $1 million in compensation.
It takes time and money to defend against a lawsuit. You could wind up paying court costs, attorney's fees, or even a settlement or court-ordered judgment.
Here are a few recent examples of general liability lawsuits:
A Walgreens store in Harrison County, Mississippi, is facing a negligence lawsuit over an alleged slip-and-fall accident.
A customer asserts that in March 2022 she slipped on a trash bag in the parking lot that was wet from rain, causing her to fall and sustain injuries. The lawsuit claims the trash bag created “a dangerous and unreasonably unsafe” condition, with no warning signs posted.
In the lawsuit, which is still pending, the customer is seeking compensation for medical bills and punitive damages.
A Connecticut woman sued the Keystone Resort in Colorado, accusing the resort and two ski patrollers of negligence after she allegedly suffered bodily injuries from an accident. The woman had injured her shoulder on a ski run and asked the resort’s ski patrol for assistance.
The suit, which is pending in court, states that two ski patrollers placed her in a toboggan to transport her off the mountain following the initial injury. It alleges the ski patrollers lost control of the toboggan, which tipped onto its side, causing additional injuries to her arm, shoulder, and face.
An Alabama woman is suing several manufacturers of chemical hair straighteners in court, claiming they failed to disclose links between the hair relaxers they sold and an increased risk of multiple types of cancers, as well as other side effects.
The woman developed uterine cancer after decades of applying the products, which led to a hysterectomy. An October 2022 study revealed that ingredients in hair straighteners can increase the risk of uterine cancer by a factor of nearly three.
The lawsuit, which is pending in court, is one of many recent lawsuits making similar claims.
An Illinois man filed a lawsuit against Buffalo Wild Wings, accusing the company of false advertising in its promotions for boneless chicken wings.
Filed in March 2023, the lawsuit states a man bought boneless wings from a Buffalo Wild Wings restaurant in Illinois on the belief they were chicken wings that had been deboned, when instead they were more like chicken nuggets.
The suit claims he suffered financial injury from false advertising by the restaurant chain.
In a tweeted response, Buffalo Wild Wings noted that its boneless wings were all white meat chicken in addition to “Our hamburgers contain no ham. Our buffalo wings are 0% buffalo.”
Monster Energy described the visual look of the restaurant's sign as confusingly similar to its own trademark, which it has used since its launch in 2002. The company is demanding a trial by jury to resolve the issue.
This is far from the first lawsuit from Monster Energy. The company has been called a "trademark bully" for its track record of defending its brand in court against any company that uses the word "monster" or claw marks in its advertising.
In each of the above examples, the insurance company would cover the cost of the lawsuit up to the general liability policy limit. That includes paying for an attorney to represent the defendant, court costs, and the final judgment or settlement. The judgment is when the judge or jury rules on a dollar amount owed to the party suing your business.
However, some cases are resolved before that point. Settlements sometimes occur when both parties voluntarily agree on the amount of damages out of court.
One of the benefits of having insurance coverage is that the insurer 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.
There are limits to general liability and the types of claims it covers. For example, the policy does not cover employee injuries, which is something covered by workers' compensation insurance.
General liability also doesn’t cover lawsuits accusing your business of unsatisfactory work or a missed deadline. This would fall under your professional liability insurance policy, also known as errors and omissions insurance (E&O).
While general liability covers property damage claims if you damage someone else’s property, it won’t cover damage to any real estate, equipment, or inventory owned by your business. Commercial property insurance would cover your business's physical location and any business assets you store there.
A business owner’s policy combines general liability coverage and commercial property insurance into a single policy and is usually less expensive than buying these policies separately.
If your business owns any vehicles, you will need commercial auto insurance. Your general liability policy or personal auto insurance won't cover any vehicles operated for business use.
For certain types of businesses, such as advertising agencies and publishers, general liability excludes defamation and copyright claims. When your business activities increase the risk of these claims, you may need to purchase media liability insurance.
Complete Insureon’s easy online application today to get insurance quotes from top-rated U.S. carriers. You can also consult with an insurance agent on your business insurance needs. Once you find the right policy for your small business, you can begin coverage and get your certificate of insurance in less than 24 hours.