Why You Need General Liability Insurance for Your Business

Posted by  On February 8, 2021
The need for general liability insurance for your business

As a business owner, you need to become professional at juggling many different things to keep it up and running smoothly: finances, marketing, staff, products, and a neverending list of organizational tasks. There’s a lot of hard work and planning when it comes to running your business successfully.

You spend many long days, nights and significant investments into building your business and making your dreams come true. But what happens if your products, services or staff cause harm to a customer, visitor or other third-party?

All it takes is one instance of malfunctioning equipment, or more commonly, someone slipping and falling to put you in the middle of a lawsuit, which can leave you liable for thousands of dollars out of pocket.

About 40 percent of small businesses cannot recover from a financial disaster like this. Lawsuits against your business can cost you time, a substantial amount of money and even your reputation with your clients.

Liability is one of your business’s biggest threats, which is why purchasing general liability insurance for your business is critical.

What is commercial general liability insurance?

Commercial General Liability (CGL) insurance is meant to cover damages which your business is found legally liable for — meaning any bodily harm or property damage to third parties. That includes when you and your staff are doing business off-site.

For example, if a client is visiting your business and they slip and fall on ice on your property, they can file a lawsuit against your company should they sustain an injury. Your CGL policy can help you mitigate the losses if a third-party sues you. CGL can cover your legal fees, damages, out-of-court settlements, and more in the event of a claim.

What exactly does Commercial General Liability insurance cover?

Your CGL policy will typically cover you for the following:

  1. Third-party Property Damage

    If your business damages someone else’s property, you can be held liable. CGL can help you cover the expenses. For example, if you own a decorating company and one of your painters spilled paint all over your client’s floor, your CGL policy will help cover the costs of repairing or replacing the floor.

  2. Third-party Bodily Injury

    You can be sued if a customer or other third-party person enters your business property and gets injured. That can include any physical injury, sickness or disease, including death, resulting from your business operations. For example, if someone slipped and fell on your business property and broke their arm, a bodily injury claim would be able to cover the expenses related to their medical bills and lost wages.

  3. Personal and Advertising Injury

    Your CGL policy will also protect you from claims of libel, slander, defamation, false advertising, violations of privacy, copyright infringement and other kinds of reputational harm.

  4. Products Liability

    Any bodily injury or property damage your products caused, either because it was faulty or defective—for example, a small toy for children that do not have a choking hazard warning.

  5. Tenant’s Legal Liability

    Pays damages to your landlord if the commercial property you rent or lease for your business becomes damaged or destroyed, and you are found at-fault.

  6. Legal Costs

    Any legal expenses incurred due to being sued, fighting the claims in court or any settlements from the lawsuit.

  7. Employer’s Liability

    This is available as optional coverage for injured employees.

  8. Non-owned Auto Coverage

    This is liability protection for when an employee needs to drive a personal vehicle to conduct business.

Keep in mind that the above information only summarizes the main sections of a CGL policy package. Be sure to speak with your insurance provider for more details.

What is not covered under Commercial General Liability insurance?

  1. Damage to Your Property

    You will need to get commercial property insurance if you want to help protect your owned or rented business property and business equipment.

  2. Uninsured Business Operations

    Suppose you make a change to your business operations, like adding in a new service without letting your insurance provider know. In that case, you will not be covered under your CGL policy for any related injury or damage.

  3. Errors in Professional Services

    Your CGL policy will not cover you if your business makes professional service errors, such as giving out professional advice that causes financial losses. You will need Professional Liability Insurance for these types of claims.

  4. Cyber Security Breaches

    Any cyber-attack that involves your technology systems and customer data, such as a privacy breach or any other loss, theft or use of data, needs insurance coverage. You will need Cyber Liability Insurance for this.

  5. Business Crime

    This is coverage for any workplace fraud, embezzlement, or other criminal activities committed by employees, executives or vendors. Crime Insurance handles these types of claims.

What businesses need Commercial General Liability Insurance?

We recommend getting Commercial General Liability insurance if you own a business that comes into contact with any third-party. This includes clients, vendors, suppliers, other companies, and in short, almost all types of business. You especially need a CGL policy if the following is true:

  • You or your staff own, rent or lease a space that is available to the public.
  • You have a home-based business, and your clients visit your home.
  • You handle your client’s property.
  • You conduct business offsite, visit your client’s home or workspace.
  • You advertise or create marketing materials for your business.
  • You sell physical goods.
  • You perform any physical service.

How can Commercial General Liability Insurance benefit you?

CGL insurance is one of the most common forms of commercial insurance and provides you with critical protection because it covers risks that every company faces. Whether you are a solo operation or a large commercial business, you could be liable for all kinds of damages or injuries to a client, visitor or any third-party that can be traced back to your company.

Lawsuits take massive amounts of time to settle, and not only that, but they are also very costly. For example, bodily injury claims cost a considerable amount to defend, with settlements reaching upwards of $1 million quickly. If you don’t have that money saved up, any prolonged litigation process can eat away at your wallet and even start to drain your assets.

For more information about Commercial General Liability Insurance, call Archway Insurance at 1-833-536-0529 or contact us here.

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