GENERAL LIABILITY

Commercial General Liability (CGL) Policy — a standard insurance policy issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability.

Commercial general liability insurance is one of the most important coverages you can buy for your business. That’s because a liability claim can be devastating to your business. And if you don’t have the money to cover a claim, you may have to close your business’ doors for good.

 

A general liability insurance policy can help protect your business from:

  • Third-party bodily injury if someone sues you because they were injured on your business property. For example, if a delivery person trips on loose carpeting and breaks their wrist, general liability insurance can help cover the costs of the lawsuit and help pay for the medical bills.
  • Third-party property damage if you or one of your employees damages someone else’s property. For example, general liability insurance can help cover the costs if your equipment breaks a neighboring business’ window.
  • Reputational harm if someone sues your business for libel or slander. For example, if you say something about a competitor’s product during an interview and they make a claim that it slandered their business, general liability insurance can help cover your legal costs.
  • Advertising injury if another business in your industry claims that your advertising looks too much like theirs. If they say it’s hurting their business, general liability can help cover your costs to resolve the claim.

 

If someone makes a claim against your business, commercial general liability insurance can help cover your costs for:

Legal teams to represent your small business

  • Witness fees
  • Evidence costs
  • Judgments or settlements

Be aware that general liability insurance does not cover:

  • Employees’ work-related injuries or illnesses, which workers’ comp insurance can help cover
  • Damage to your own business property, which commercial property insurance helps cover

 

Is Commercial General Liability Insurance Required By Law?

General Liability Insurance DefinitionNo, commercial general liability insurance is not required by law. However, most businesses don’t have the money to survive a large liability claim against them. When you realize that 4 out of 10 small businesses will experience a liability claim in the next 10 years, a general liability policy makes sense.1 Our claims data shows:

  • Customer slip and fall accidents account for 10% of liability claims, and the average cost is $20,000.
  • The average cost of all customer injury claims is $35,000.
  • The most costly liability claim is usually reputational harm, averaging $50,000.2
  • Without general liability insurance, you may have to pay for these claims with your own business and personal assets.

 

General liability insurance is also important because other businesses may not want to work with you without proof of insurance coverage. They want to know you’ll be able to complete the work even if someone makes a liability claim against your business. If you don’t have general liability coverage and end up going out of business, they’d have to start over by hiring someone new.

Small business owners with a limited liability company (LLC) may think they don’t need business insurance. Typically, an LLC will not protect you if someone makes a claim against your business because you:

  • Acted negligently or irresponsibly
  • Did something illegal, whether you knew it or not
  • Mixed your personal expenses with your business expenses

As an LLC, you must respond to complaints and hire your own lawyers. With general liability insurance, your insurance company helps you handle a lot of the legal effort, so you can stay focused on running your business.

 

 

 

 

*Information retrieved from Nationwide and The Hartford.

 

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