Tag: What Is the Difference Between Garage Insurance and General Liability?

What Does Liability Insurance Actually Cover?

Owning and operating a business can come with unforeseen expenses, such as liability claims. Many businesses are unprepared to cover these costs, even though liability claims are unfortunately quite common and usually result from normal business operations. Having liability insurance coverage can keep your business from having to pay these costs out of pocket. Read on to find out what types of claims liability insurance can protect you from.

What Does Liability Insurance Actually Cover?

Sensible risk management strategies are a must for business owners, as it’s essential to keep your business protected from unnecessary expenses. Though there are many perils associated with business ownership, the number one way to keep your business protected is to ensure your business is properly insured. When you’re unexpectedly hit with a liability claim, insurance can be the difference between your business coming out on top or facing financial ruin.

Liability coverage is an excellent ally in keeping your business protected because its coverage extends to multiple facets of running a business. Claims related to injuries on your premises, damage to your client’s property, or even allegations of copyright infringement and false advertising are all covered under this type of insurance – and these are just a few examples! Liability is the type of insurance you need in your corner for mitigating all the risks of business ownership.

What Types of Claims are Covered by This Policy?

There are many situations in which your business could be held responsible and expected to pay for. Proper insurance coverage prevents you from paying these various costs out-of-pocket. This type of insurance includes coverage for expenses, such as legal and medical expenses, as well as compensatory and punitive damages related to the following types of claims:

Bodily Injury 

Bodily injury coverage provides protection against losses for bodily injury to others (including clients, customers, or employees) that may have been caused by your operations. Whether you’re found liable for bodily injury due to non-professional negligent acts or due to your premises or business operations, this type of insurance can cover medical expenses and legal expenses associated with this type of claim.

Bodily injury includes physical and/or mental injuries to a client, customer, or employee that may have been caused by your operations, including emotional distress. Common bodily injury lawsuits include customer slip and falls (ex: a customer slips on loose or wet flooring while visiting your business and is injured), and other tortious acts that may cause a claimant to suffer loss or harm, such as intentional infliction of emotional distress, and negligence.

Property Damage

Property damage coverage, like bodily injury coverage, provides protection against losses from the legal liability of your business for property damage occurring due either to non-professional negligent acts or arising out of the premises or business operations. In the event that your business causes property damage, including employee accidents, this insurance will cover the costs of the damage.

For example, if your employee accidentally breaks a client’s windows while working at their home, the cost of the damages will be covered by your insurance. Another example would be if your employee leaves the water running at a client’s home and causes substantial damage; without insurance, your company would be expected to pay for the costs of this damage. However, having insurance means your employee’s mistakes won’t cost you any extra coin.

Product Liability

Product liability is essential coverage for manufacturers and any businesses that sell goods. While we know customer safety is always a priority, sometimes bodily injury or property damage can occur due to an unfortunate product malfunction. Product liability will cover the costs of any claims related to bodily injury or property damage caused by a product you sell or manufacture.

Tenant Liability

Tenant liability protects your business from damage to property that you lease or occupy for business purposes. This protects you against the day-to-day risks of running a business within a rented space, including lawsuits and payments of claims related to third-party bodily injury or property damage. It’s common for landlords to require proof of insurance before renting out a space, so having proper coverage is an asset when looking for a new home for your business.

Personal Injury, Advertising Injury, and Reputational Harm

Liability coverage keeps you protected in the event of personal and/or advertising injury claims made against your business. You’d be surprised how easy it is to find yourself facing an advertising injury claim; saying something untoward about a competitor to the wrong audience, for example, could result in being hit with a defamation lawsuit. Similarly, making grandiose claims in an ad campaign could see you facing a class-action lawsuit for allegations of false advertising.

Personal and advertising injury liability protects your business against a range of offenses, such as:

  • Libel
  • False advertising
  • Slander
  • False arrest
  • Defamation
  • Malicious prosecution
  • Wrongful eviction
  • Wrongful entry
  • Invasion of privacy

Copyright Infringement

In addition to advertising injury claims, this type of insurance protects you from lawsuits alleging the unlawful use of another’s advertising idea or copyright. Copyright infringement occurs when someone else’s work is used on your product or in your business’ ads without the express permission of the copyright holder. If your business is found infringing on another’s copyright, your liability coverage will cover the cost of damages and legal fees.

Other Costs Covered by a General Liability Policy

In addition to these specific types of claims, a general liability policy will help to cover the administrative costs associated with handling all the covered claims described above. The amount of coverage for these costs will vary, as they depend on the limits of your specific policy. Additionally, this type of policy will cover smaller medical claims that do not require litigation and a variety of costs related to legal defense and the process of litigation.

Medical Payments

A general liability policy offers limited coverage for medical payments, including payments for injuries sustained by clients or customers that were caused by an accident taking place on the premises of your business or when exposed to your business operations. Medical payments coverage does not require legal action to be accessed, meaning your business is able to settle smaller medical claims promptly and without litigation.

This type of policy will cover all necessary and reasonable medical expenses accrued by a person injured or killed in an accident that takes place on your business premises or arises from your business operations. This includes surgical costs, ambulance fees, hospital fees, professional nursing expenses, and funeral expenses. Since medical payment coverage is provided on a no-fault basis, there is no defense or legal liability coverage.

Legal Defense Costs

Liability insurance will cover all legal fees, including court costs, legal defense, judgments, and settlements for the above types of claims. On your behalf, your insurance will pay all damages if you are found liable (up to the coverage limits of your policy). Your policy will also cover the costs associated with administrative work and legal secretaries.

Complementary Policies

While this type of insurance covers a wide range of expenses, there are certain additional policies you’ll need to purchase to ensure your business has complete coverage. Workers compensation, employment practices liability, liquor liability, pollution liability, and professional liability may be beneficial complementary policies for you. Talking to an experienced insurance professional can help you to determine which endorsements are right for your business.

What Type of Businesses Need General Liability Coverage?

No matter the size of your business, or your industry, you can benefit from general liability coverage. This type of insurance is especially beneficial for businesses with locations that are accessible to the general public, as well as businesses that:

  • Work directly with customers and/or clients
  • Manage client-owned property and/or assets
  • Rent or own commercial space

Independent contractors and entrepreneurs can also benefit from this type of insurance, as they can also be held liable for the same injuries and damages that general liability policies cover. Liability claims can be extra difficult for independent contractors and entrepreneurs because they’re solely responsible for their finances. Choosing not to properly insure a sole proprietorship can, unfortunately, lead to significant financial hardship and even bankruptcy.

What You Risk When You Remain Uninsured

If someone files a claim against your business, the cost of legal defense and court fees can add up quickly. With the additional costs of administrative work, legal secretaries, and any associated costs from judgments or settlements, your business can be stuck footing an extremely expensive bill. We’re talking hundreds of thousands of dollars! A general liability insurance policy is essential for helping your business cover these costs.

General liability insurance is the most important insurance coverage for your business to have. A lawsuit can have an immense negative impact on a business; without proper insurance, facing a claim of any kind can place a tremendous financial strain on your company’s bottom line. Because liability suits happen so frequently, you need a good insurance plan in your corner. Visit ISU Armac today to pair your business with the best agency for all your insurance needs.

What Is the Difference Between Garage Insurance and General Liability?

All businesses need liability insurance, but some specific industries may require specific insurance policies. While many small businesses can benefit from a general liability insurance policy, car garages, mechanics, and other businesses in the auto industry may benefit more from garage insurance. But what’s the difference between garage liability and general liability?

What Is the Difference Between Garage Insurance and General Liability?

General liability is a multipurpose policy that protects small businesses from a variety of common risk areas. Most business owners take out a general liability insurance policy to protect the business from lawsuits related to injuries, damage to client property, and accusations of false advertising. In general, having general liability insurance is a standard requirement for most businesses.

Garage liability is different. For garage insurance, the components of the policy are specific to the automotive industry. Garage liability insurance provides coverage for claims related to injuries and property damage to vehicles related to garage operations or services. With this insurance, garage owners will have coverage for any unexpected costs that may arise as a result of their business operations.

Keys of General Liability

General liability insurance will cover four types of liability risks. Product liability is the physical or property damage that may be caused by a product or service, bodily injury refers to a third-party injury sustained as a result of business operations, tenant liability is any damage to the property occupied by your business, and advertising injury related to false advertising or defamation claims.

With general liability, coverage in these four risk areas will save you from expensive legal fees and help your business recover more quickly if any claims are made against you. Without general liability insurance, it’s very difficult for a small business to recover from these types of claims.

Keys of Garage Liability

Although many of the features of garage liability may appear similar to general liability, the nuance of the policy details is where you will find the key differences between these two policies. Garage liability also covers four specific areas, including:

Third-Party Injuries

Third-party injuries refer to people who are injured as a result of your business operations. This does not include your employees, who should be covered by a different type of insurance policy. If a customer or other person not related to your business is injured at your garage, then you will need insurance to cover any fees related to their treatment.

For example, if a customer slips on oil or is otherwise injured while in your garage, then you are responsible for ensuring they have proper treatment for their injury. Failure to pay for hospital fees, surgery fees, or physical therapy rehabilitation fees could make you legally liable. Your insurance policy will cover the cost so you can avoid financial pitfalls.

Third-Party Property Damage

Garages tend to deal exclusively with third-party property – any time an automobile is brought into a garage, the small business becomes responsible for the treatment of the property. If a car is damaged because of employee negligence or as part of business operations, then the garage is responsible for paying for that damage.

The most common example of third-party property damage at a garage is scratching or dinging a vehicle, either while moving the vehicle to another area of the garage or as a result of tools harming the vehicle during repairs. If a client’s car is damaged while in the care of a garage, then the client has grounds to claim damages. This part of garage liability will cover the cost of any necessary repairs.

Product Liability

The items sold at a garage are typically repairs items for vehicles, which means all products sold by your business must be in good quality. Selling products that are not of good quality can potentially hurt the normal operation of a vehicle, particularly if the part is known to be faulty.

Selling defective automobile parts (even unintentionally) or using parts for repairs that are not appropriate for a specific car can create costly damages. This insurance will help you cover the costs of any repairs and protect you from legal fees from a lawsuit or other claim.

Liability Claims

Just like any other business, your garage is also vulnerable to liability claims. Liability claims in this policy may also be related to employees. Sometimes, liability claims include accusations from clients who claim they have been treated unfairly, such as with discrimination or dishonesty about the cost of repairs. Protection from liability claims will help you settle any damages if your business is found liable.

What Businesses Require Garage Liability?

Garage liability is a tailored insurance, which means it’s most appropriate for businesses in the automotive industry. While repair garages are likely the most common business to use this type of insurance, there are other automotive businesses that would also benefit from using this type of policy. Some examples include:

  • Dealerships
  • Auto body customization and paint shops
  • Detailing and car cleaning
  • Auto glass installers
  • Electronic repair
  • Emission test shops
  • Impound lots
  • Restoration shops
  • Parking garages and lots
  • Tow truck operators
  • Tire shops
  • Service stations
  • Valet services

Essentially, any time a business or employee will handle the third-party automotive property of a client, this specific insurance policy is good to have for overall coverage. Even if any employee will only be handling a vehicle for a short time, this coverage is necessary since car repairs can be very expensive.

What Is Garage Keepers Insurance?

Although garage insurance and garage keepers insurance seem like similar policies, it’s important to understand the distinction between these two policies. Garage keepers insurance is a policy specifically for businesses that take temporary custody or care of a vehicle, which is not something all automotive-related businesses will do.

With garage keepers insurance policies, the details of the policy specifically cover property damage related to accidental collision damage, fire, extreme weather, vandalism, or theft. If a client leaves their vehicle in the custody of your business, then you are responsible for ensuring that vehicle is returned to them in good order. Without this insurance, you may be on the hook for paying the full cost for replacement and repairs.

Do You Need Both Garage Liability and Garage Keepers Insurance?

This depends entirely on your business operations. Some businesses may not need to have this type of insurance, such as service stations, dealerships, or certain repair shops. But other businesses may have an overlap in business operations that will require the business to have temporary custody of a vehicle to complete certain repairs.

For example, if a repair will take several days, then when the owner of a vehicle hands over their keys, your business takes temporary custody of the vehicle until the repair is complete. If any damage is sustained to the vehicle not related to normal business operations, then you will need garage keepers insurance to cover the damages. An insurance expert will be able to advise whether or not you need both policies.

Do You Need Both Garage Liability and General Liability?

In some cases, you may only need garage liability to cover your business operations. However, there are some automotive businesses with enough crossover that it may be necessary to have both types of insurance policies. For example, car dealerships that have on-site service centers may benefit from having both insurances since garage liability would not necessarily cover claims made on the car-selling portion of the business. Again, an insurance expert can advise the ideal insurance policy or combination of policies that are best for your business.

What Does Garage Insurance Not Cover?

Generally speaking, while garage liability insurance covers third-party claims against your business, it will not provide the same protection for your business or your employees. For example, garage liability does not cover damages related to your business building, tools used for business operations, other business property, employee injury, or other personal damages.

To cover these types of damages, you will need additional insurance policies. Some common policies include employment practice or professional liability coverage, worker’s compensation, and other business owner’s insurance. The insurance policies you choose should be selected based on your specific business needs.

Why Do You Need Insurance for Your Business?

The most obvious reason to secure a good insurance policy for your business is to avoid expensive financial compensation for any claims made against your business or your employees. Recovering from third-party personal or property damage can be expensive, particularly for small businesses. But in addition to this, you may need the correct insurance for your business to comply with local state or federal regulations to run your business.

Businesses in the automotive industry generally require different types of coverage than other businesses. Because automotive businesses handle third-party property to complete automotive repairs, it’s necessary to have a comprehensive garage insurance policy to provide coverage for any liability claims. Some automotive businesses may even require a combination of different insurance policies. For more information about garage insurance for your business, contact ISU Armac Insurance Services.