Almost everyone who runs a small or medium-sized business needs to take out general liability insurance. This type of policy protects companies from lawsuits related to personal injury and property damage. It is therefore crucial for anyone who runs a business that involves contact with customers. But what exactly does this kind of insurance cover? Can you expect the provider to pay out if you’ve injured someone due to negligence?
In most cases, the answer is yes. The purpose of liability insurance is to protect businesses from the risk of being sued due to negligence and accidental damage. If someone gets hurt while they are at your firm’s office or shop, you injure someone or damage their property at their home, or you make an advertising mistake, you can expect the costs of the resulting lawsuit to be covered by your insurance.
Does General Liability Insurance Cover Negligence?
Negligence is defined as the failure to uphold the duty of care and protect others from harm. Often, it is not an action but the lack of action. For example, a business owner might be negligent if they fail to place warning signs in an area where the floor is slippery. This puts their customers at risk and can cause an accident. While some forms of negligence are obvious, others are more subtle and harder to prevent.
If you own a business, you must purchase liability insurance to protect yourself from lawsuits related to negligence. Generally, this type of policy covers negligent acts, as long as you weren’t aware of what you were doing and there was no intention behind your failure to act. Depending on your business and local area, your insurance provider might require you to take certain precautions to minimize the chance of a lawsuit.
An Injury or Property Damage at Your Business Location
The most common problem liability insurance protects you from is an injury or property damage that occurs at your in-person business location. Since we live in a litigious society, members of the public can sue business owners if they slip and fall or otherwise injure themselves while on the company’s premises. Such a lawsuit can cost you hundreds of thousands of dollars, but a good liability insurance policy can protect you from financial ruin.
If someone gets injured or their property gets damaged while they are in your shop, office, or center, your insurance policy will pay for the compensation and the legal costs associated with the case. When you purchase insurance, always read the fine print. Sometimes, there are conditions that stipulate when a policy does and doesn’t pay out. You might not be covered if you didn’t warn your customers or you didn’t tell the insurers the truth about your business.
An Injury or Property Damage at Another Location
Company owners who don’t operate out of a physical location that is visited by clients might wonder whether they need to take out liability insurance. The answer is still “yes” in most cases, especially if the owner or employees interact with customers in-person. For example, contractors who visit people’s houses could accidentally injure someone while on the job or damage their property.
This could be due to negligence or due to a circumstance outside of the worker’s control, such as a badly manufactured tool or an unsafe work environment. No matter the cause of the issue, you can usually expect liability insurance to pay out. If you run a business that involves visiting people’s homes, you should consider looking for industry-specific liability insurance that covers your business’s risks.
Problems Related to Advertising
What if your business is conducted entirely virtually? Can you skip insurance in this case? The answer is most likely “no” because you’ll still interact with others and potentially cause harm. The most common issue is related to advertising. You could accidentally make a false claim or offend someone, who then sues you for damages. This type of issue is also covered by general liability insurance.
What Is Excluded?
As discussed, liability insurance can protect businesses against claims of negligence, personal injury, and property damage. However, most companies also face other risks that might not be included in the policy. Issues related to employees, professional mistakes, and car accidents aren’t usually included in general liability. What’s more, intentional or expected damage is never covered.
Expected or Intended Damage
Most general liability policies don’t protect against damage that is expected or intended. If you or one of your employees intentionally damage your own product or someone else’s property, your policy is unlikely to pay out.
For example, if a contractor gets frustrated while working a job and smashes a window or punches a wall, the worker or the business owner will need to pay for the repairs. To avoid any such issues, you must always conduct yourself professionally, and employees must be trained before starting their job.
Workers’ Compensation
The purpose of liability insurance is to cover you in case a customer files a complaint against you. However, it doesn’t include issues related to your workers. To protect your company against claims made by your employees, you should take out workers’ compensation insurance. This type of policy pays out when one of your employees files a lawsuit due to an injury or discrimination at work.
Workers’ compensation insurance can pay for your employee’s lost wages, their medical treatment, and their emotional recovery. It also covers any legal fees associated with such a case.
Auto Accidents
Many businesses rely on their company cars or fleet of vans. Without these vehicles, your workers can’t make deliveries, visit clients, or pick up items. Unfortunately, auto accidents are common, and if your firm has been in operation for many years, it’s likely that there will be at least one incident on the road.
Liability insurance doesn’t cover damage related to car accidents, so you’ll need to take out a separate policy called business auto insurance. This can pay for the medical bills of injured parties and the repair or replacement of your company vehicle.
Professional Mistakes
Many jobs involve responsibilities towards other people or their property. For instance, a therapist or counselor has a duty of care and must speak up if they believe that someone is in danger. Similarly, financial advisors or attorneys are responsible for people’s assets, and they shouldn’t make errors that could cause losses.
While most professionals act ethically and do their best, mistakes can happen to anyone. If you’ve made an error or failed to act, and it has caused financial, physical, or emotional damage, you might be faced with a lawsuit. Problems directly related to your profession aren’t covered by general liability insurance, so you will have to take out professional indemnity insurance.
Should I Get General Liability?
As you can see, there are many reasons why you should get liability insurance. If you advertise, run a business from a physical location, or visit customers in their homes, getting insurance is essential. Some of the businesses that require a policy include small shops, salons, restaurants, cafes, leisure centers, gyms, law offices, medical practices, and professionals offering financial services.
Another reason to get general liability is that many contracts require you to have a policy in place. Therefore, you might not be able to pick up new business easily if you skip insurance. By getting a good policy that covers your company’s needs, you demonstrate to your associates that you are serious about your business.
How to Find the Best Policy
There are many different liability insurance policies available, and it can be hard to figure out which one is suitable. While the cheapest isn’t always the one that suits a business best, it’s also not usually necessary to go for the most expensive policy. If you’re unsure about how to find good insurance products, you should get in touch with an agent.
When you work with a professional, you can take advantage of their experience and knowledge to find the cheapest, most comprehensive policy out there. After contacting your agent, you will receive free quotes within minutes. You can then examine each one and determine which insurance company fits in with your company’s individual risk factors. Your agent will help you consider all factors, optimize your purchase, and review your policy on a regular basis.
Because we live in a litigious society, around 40 million lawsuits are filed annually. Many of them involve businesses that either have an in-person location or complete projects at customers’ homes. Often, the reason for the complaint is negligence, which is the failure to prevent damage or injury. A good general liability insurance policy can protect small and medium-sized businesses from the financial consequences of such a lawsuit.
Because liability insurance is necessary for almost every business, there are countless policies available. It can therefore be hard for business owners to find the best one. If you’re looking to take out a policy or switch from your current provider, you should speak to an experienced insurance agent. Contact us now at ISU Armac in Victorville, CA to discuss your situation with a professional and get your free quotes.
