A business’s success or failure depends on a number of factors. Business owners might say that advertising, customer service, finances, logistics, or product quality are among the main aspects of a business that determine its success. However, if your business is held liable for damages or sued for something that happened as a result of its operations, it could severely hurt or ruin your livelihood. Without a solid commercial general liability policy, even the best run businesses are at risk for failure in the aftermath of an incident. Whether it is because of damage to the company’s reputation, loss of equipment and inventory, loss of real estate, or financial ruin from legal fees or damage payments, a business may never fully recover if it is caught uninsured when something goes wrong. Apart from making sure there are no stray banana peels on your store’s floor for customers to slip on, you can protect your business with commercial general liability insurance.
This specific type of insurance coverage for businesses can be referred to as commercial general liability (CGL) insurance, business liability insurance, or general liability (GL) insurance. To put things simply: all these names refer to the same type of policy that protects businesses from unfortunate events that they may be held responsible for. A commercial general liability insurance policy will pay for legal defense fees as well as damages that the business is held liable for. The insurance company will pay for these expenses up to the amount stated as the policy coverage limit, which varies depending on the business’s risk level and the amount of coverage that is desired. The cost of a commercial general liability policy depends on the type of company that is being insured, the size of the company and number of employees, geographic location of operation, and the risk level that is associated with the industry or business.
Most commercial general liability insurance policies include coverage for: bodily injury, property damage, personal and advertising injury, and medical payments. Let’s break down what each of these categories include.
- Coverage of liability payments if a non-employee is physically injured within the premises of your business or as a result of your business’s operations.
- Coverage of liability payments if a non-employee suffers emotional distress or a mental injury and your company is at fault.
- Coverage of damages if your company or any employee is responsible for the harm or loss of a third party’s property while on the job.
Personal and Advertising Injury:
- Coverage of financial losses if your company is responsible for libel, false advertising, slander, copyright infringement, malicious prosecution, wrongful eviction, or invasion of privacy.
- Coverage of the medical bills of a non-employee that is injured on the premise of your business or as a result of your businesses operations.
- Medical bills include surgery, hospitalization, ambulance, funeral costs, nursing, and general medical expenses.
- Medical bills are paid for up to a limited amount and without legal action being taken.
The above coverages listed are what are included in a standard commercial general liability policy. Depending on what type of business you have and the specific risks that your business is vulnerable to, you might want to look into additional coverage to add to your policy. Additional liability coverage will insure that your business is protected from as many unexpected mishaps as possible. Expanded liability coverage can include directors and officers liability, liquor liability, or pollution liability.
Directors and officers liability coverage will protect a company if a leader is ever accused of or guilty of lying, omitting facts, misstatements, misleading comments, negligence, or failure to do his or her duty. Basically, if you have a hothead or a sketchy character in the corner office, this additional coverage will protect your company from his or her mistakes. Liquor liability protects businesses that serve, manufacture, sell, or purchase alcohol. It can be purchased as part of a commercial general liability policy or can be purchased separately as simply liquor liability coverage. This type of coverage protects businesses in the event that a client becomes intoxicated and injures themselves, others, or causes damage to property. Pollution liability protects industrial and agricultural businesses from a wide range of environmental liabilities. It protects companies against long term or sudden accidental pollution, pollution that can lead to bodily injury, and pollution clean up costs. This coverage can also provide protection of assets that are destroyed by environmental factors.
It is important for business owners to understand their business’ risks, as well as what types of additional coverages are necessary to have in their business insurance policy. It is also essential that business owners make the right choice when deciding how to purchase their insurance policy. Commercial general liability policies can be purchased alone or as part of a larger business owners policy (BOP) or commercial package policy (CPP). For companies in need of even more extensive coverage, it may be necessary to purchase a commercial excess policy, or umbrella policy. Because every business is so unique, business owners throughout the country have very different and specific needs when it comes to protecting their companies. To ensure proper coverage, understand the risks your business faces and work with an agent to create a comprehensive policy that works for your company.