The truth is even honest businesses are exposed to liability. Negligence is only one aspect of liability and just because you weren't aware of unsafe conditions in your store or a defect in your product doesn't mean you aren't liable. This is why it's so important to be aware of the risks and liabilities that are baked into your operations and why things like general liability insurance are so important.
General Business Liability
As its name would imply general business liability casts a pretty wide net including things such as:
- Damage to a person’s property
- Bodily injury and related medical expenses
- Legal defense costs
- False advertising
- Libel and slander claims
No matter how safe you think your business is or what redundancy you have built into your operations, all it takes is one slip up and you could be staring down a hefty lawsuit. That's why it's so important to purchase general liability insurance to shield yourself from some of these costs.
How General Liability Insurance Works
General liability insurance provides protection against the types of claims mentioned above. It's important to note that general business liability covers you only in the case of third-party lawsuits. It is not workers compensation or employment practices liability insurance and it will not cover you if an employee decides to sue. Think a customer getting injured in your store, not an employee getting injured in the workplace.
In practice a general liability policy is relatively simple, your provider will pay out up to a certain point against a liability claim. If you got hit with a lawsuit of $200,000 and your coverage caps out at $175,000 for example, you would have to pay the remaining $25,000 out of your own pocket. Since it can be difficult to know how a claim will pan out most providers will also offer an optional umbrella policy to cover excess liability once the limit of your basic policy has been reached.
Determining how much coverage your business needs can be tricky. A construction business would probably need more than software developer as they are exposed to more liability. You also need to take into account location as some states award more in damages to victims of things like personal injury or property damage than others do. The bottom line is you should talk to a knowledgeable provider before you make any decisions on a policy as they will be able to more accurately assess the threats inherent in your business.
General liability insurance is a vital part of any liability and risk management plan. At Summerlin-Roberts we will work with you to find a general liability policy that protects your business from day-to-day operational risks. Please contact us today to find out more about our liability and risk management programs.