General liability insurance can be purchased as a stand-alone policy or as part of a business owners policy. It is probably one of the most important policies you can buy to protect your company against serious financial risk or bankruptcy due to a lawsuit.
General liability insurance will cover your company in case it is sued by employees or third parties (such as customers, vendors or visitors to your premises) for claims that happen as a result of normal business operations. This includes:
The policy would pay for:
Rates will vary depending on your company’s and its industry’s exposure to risk. Leaders’ Choice has access to a number of insurance companies, some of which may specialize in your specific industry, which will often yield lower rates.
Under a general liability insurance policy, the insurer is obligated to pay the legal costs of a business in a covered liability claim or lawsuit. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury (damage from slander or false advertising). The insurance company also covers compensatory and general damages. Punitive damages aren’t covered under general liability insurance policies because they’re considered to be punishment for intentional acts.
General liability insurance policies always state a maximum amount that the insurer will pay during the policy period. Usually these policies also list the maximum amount the insurer will pay per occurrence. For example, if a company has a $1 million occurrence cap in its liability policy and it’s successfully sued for $1.5 million, the insurer would pay $1 million and the business would be responsible for paying $500,000.
To cover these types of situations, many companies purchase umbrella liability insurance, which picks up where their general liability coverage ends. Umbrella liability covers payments that exceed their other policy’s limits, and provides additional coverage for liabilities not covered in a standard liability insurance policy.
Most insurance companies require their policyholders to report as soon as possible any accidents that could lead to a liability claim. The insurer may then require the business owner to document the situation, forward all summonses and legal notices, and cooperate fully in any investigations.
Taking precautions before an accident can help keep your liability and insurance rates down. All businesses can take certain steps to lower the chance of a liability insurance claim:
The amount you pay for general liability insurance can vary wildly among insurance brokers.
It is critical that these policies are written correctly.
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