Owning a successful small business takes equal parts hard work and sheer luck. However, it is still important to protect your time and money by having adequate insurance coverage.

Why, you may ask? Unknown risk. You can be the most careful business owner with great employees and still find yourself in a situation where you face an expensive and time-consuming lawsuit. Keep reading to find out all you need to know about general liability insurance.

What is General Liability Insurance?

In short, general liability insurance is coverage that helps protect you against third-party claims associated with your business operations. Essentially, that means lawsuits filed by anyone outside of your company’s employment. This can include, but is notlimited to, bodily injury, property damage liability, personal and advertising injury, products-completed operations, and damages to premises rented to you.

All of this may sound incredibly technical, so we’ve provided a few examples of when general liability insurance coverage would come in handy to help you better understand.

Bodily Injury: A customer slips and falls while in your office or retail store and needs medical attention. Or one of your employees accidentally drops a tool on your customer’s hand, causing broken bones. Any situation where someone not employed by you is injured on your premises or as a result of your company’s actions.

Property Damage Liability: Your employee is trimming a customer’s tree, and a large limb falls on a neighbor’s fence, causing damage. Or your cleaning service employee accidentally leaves a sink running, which ruins the wood floors in a client’s master bathroom.

Personal and Advertising Injury: You start a marketing campaign for your business, only to find it is a copy of an idea someone else came up with five years ago, and they’re filing a lawsuit. Or you place an ad that accidentally disparages a competing company specifically, causing them to lose money and seek litigation against you.

Products-Completed Operations: Your small business builds a deck for a homeowner, but the deck collapses six months after completion and causes property damage or hurts someone. Or you create a product that is designed to help people, but causes provable injury or harm.

Damages to Premises Rented to You: The key here is the premises must be rented for seven days or less. An example here would be a retail store that rents a week pop-up shop in a local mall, but leaves an electric plug overloaded and accidentally starts a fire.

While these risks and situations may not pertain to your small business, they are meant to serve as examples of the different types of incidents that a general liability policy can cover you for.

Why is General Liability Insurance Important?

General liability insurance is important for numerous reasons, but the first is protection against the unknown. While most people don’t wake up in the morning, thinking, “Gee. I really want someone to slip and fall at my business today,” sometimes accidents happen.Which is why it is better to be prepared in the event of an incident instead of having to do damage control or defend yourself against a lawsuit later.

Who Needs General Liability Insurance?

The short answer to this question is every company needs some sort of general liability insurance. Of all the types of insurances for small businesses, general liability coverage is one of the most importantprotections you can have.

Furthermore, there might be times when you are required to have it to work with a particular client or to bid on a certain project. In most cases, you’ll be required to provide proof with a certificate of insurance, so it is handy to already have your policy in place.

What Does General Liability Insurance Not Cover?

Now that we know the basics of general liability insurance, it is important to realize what it doesn’t cover. Remember, this type of policy is considered third-party, meaning it pays for other people’s injuries and damages—not yours. Here are a few examples of excluded situations:

• Theft:Someone breaks into your office in the middle of the night and steals all your computers.
• Damage to Your Property:A vandal spray paints and damages a piece of heavy equipment owned by your business, rendering it inoperable.
• Professional Mistakes:As a lawyer, you make a mistake during court that limits your client’s ability to settle a lawsuit and costs them $25,000.

With that being said, it is essential to remember that there are plenty of other first-party insurances for small businesses. These include commercial auto insurance, professional liability insurance, and business personal property insurance. Sometimes, these coverages can be rolled into what’s called a Business Owner’s Policy (BOP). A BOP allows qualifying businesses to conveniently bundle their coverages into a single, budget-friendly policy, saving them both time and money. In most cases, BOPs include a certain level of general liability insurance automatically.

Conclusion

There are numerous reasons why a small business might consider general liability insurance. However, all of them come down to eliminating risk and protecting against claims. As an added bonus, most small businesses can write off the cost of general liability insurance premiums. However, it is always a good idea to check with your preferred tax professional before opting to do so.

Not every insurance carrier offers the right level of coverage for your particular level of risk. Find out what it means to Be Uniquely Insured by contacting our team at Selective Insurance today to discuss your general liability insurance needs and options.