We hear a lot of questions about insurance. But one of the most common is this.
“Does general liability insurance cover me wherever I go?”
We wish the answer was a simple yes or no, but there’s a bit more to it than that. Let’s consider a couple of scenarios.
Joe’s contracting job has him working on a home renovation project. As he’s demoing the bathroom wall, he accidentally hits a pipe. Water leaks everywhere and damages the floor and two of the surrounding rooms, making the home temporarily unlivable. The homeowners sue Joe to cover the damage and temporary housing costs. Joe’s assistant Moe also sues because he was injured during the incident. Will Joe’s general liability insurance cover him?
Yes and no. Joe’s general liability will cover him for the cost of the damages and litigation fees. But his coverage will not pay for Moe’s injuries.
Sara works from home as a business consultant. Sara’s doing some work on her website but after it goes live, she finds out one of the pictures she put on the homepage is copyrighted. She’s sued by the owner of the picture on the same day her home office catches fire. Will her general liability insurance cover her?
Yes and no. Sara’s general liability insurance will cover her for copyright infringement. But her coverage will not pay for damages caused by the fire.
General liability insurance isn’t a catch-all. There are limitations to its reach, even if your business travels. But because four out of 10 small businesses will experience a claim in the next 10 years, here’s what you need to know.
Who is general liability insurance for?
Most businesses can benefit from general liability insurance. Put simply, if insurance works with customers, either in a brick and mortar location or in a customer’s home, sells products, produces any type of media, or has employees, they’re at risk for a general liability claim. But if we had to choose a few industries that have higher risks for general liability coverage, we would include:
- General contractors
- Real estate agents
- Retail stores
- Restaurants
- Entertainers
- Public venues
If you’re not sure if your business needs general liability insurance, reach out to an insurance broker. They can help navigate the waters for you and help you choose a coverage plan that won’t put your business in harm’s way.
What does general liability insurance cover?
By definition, general liability insurance covers third-party damage to bodily injury, personal and advertising injury, and property damage. Here are just some of the most common scenarios general liability insurance can help protect a business from.
Slip and fall injury
Winter weather leaves the floor or a retail shop extra slippery. A shopper slips, falls, and requires surgery to repair a broken bone. She sues the store for her medical costs and lost wages while healing at home.
Property damage
A window replacement company is replacing a large bay window when they prematurely remove the original window. They haven’t properly braced above the opening and there is damage to the frame. This slows down the construction timeline and requires additional materials and labor. The homeowner sues for the extra costs.
Product liability
A bakery has just designed its own line of coffee tumblers. One of their customers buys one but then is severely burned because the design left the lid too loose. She sues for medical costs and emotional damages.
Copyright infringement
An online software team spends months coming up with a new landing page and email marketing campaign. They hire a third-party to design social media posts to bring attention to their newest product. After it launches, they find the contest of the posts were copied from a competitor, who sues for copyright infringement.
Reputation damage
An employee decides to put together a podcast to draw in new leads. He’s unaware that slander can result in a lawsuit and spends much of his on-air time trashing the competition in an effort to draw in new customers. The competitor hears about what the podcast said about their company and sues for slander.
This is far from an exhaustive list of what general liability covers. But as you can see, this type of policy can protect your business from several angles.
What doesn’t general liability cover
General liability insurance doesn’t cover damage to property in cases of fire, theft, vandalism, or natural disaster. It also doesn’t cover claims brought on by employees if they’re hurt on the job. Workers’ compensation insurance (often required by law) covers an employee’s medical bills and lost wages.
General liability insurance also has coverage limits. To make sure you’re not caught off guard, consider adding umbrella coverage to your general liability policy.
General liability insurance is a traveling insurance as it does “follow” a business — and a business owner — wherever they may go. While it doesn’t cover every possible peril, it can save a business from financial and professional disaster.
Having general liability insurance offers several benefits (and is sometimes required before work can take place). Make sure your business is as protected as possible, wherever it may go, with general liability coverage.
