li·a·bil·i·ty
/ˌlīəˈbilədē/
noun
-
the state of being responsible for something, especially by law.
"the partners accept unlimited liability for any risks they undertake"
WHO is General Liability for?
EVERY BUSINESS OWNER. PERIOD.
No matter the industry, if you own a business, you need General Liability coverage to protect you and your business from unforseen events you may ultimately be responsible for as the business owner.
WHAT does General Liability protect against?
Also known as business liability insurance, General Liability insurance protects you and your business from claims involving bodily injury and property damage that you/your business may be responsible for as well as other specfied causes of liability.
WHERE does General Liability cover me?
General Liability insurance policies typically follow the business, not just the location. Most insurance policies will specify the states in which General Liability applies. However, depending on the industry, coverages could apply to domestic and international transactions of business. Please be sure to check your policy for policy guidelines and other carrier details.
WHEN should I carry General Liability?
AT ALL TIMES.
If you are actively involved in operating your own business/operations, it is imperative that you carry an active General Liability insurance coverage throughout the entirety of your operations. General Liability is usually a REQUIREMENT to be carried at all times during the course of operation. After all, no business owner can predict when a claim will need to be filed.
WHY is General Liability important?
General Liability is considered to be one of the most frequently purchased, if not the most frequently purchased business insurance products in the industry. Almost all businesses require companies they partner with to carry some form of General Liability coverage to protect against some of the most common losses.
Common General Liability Claims
Property Damage Lawsuit
Scenario 1:
You rent the building your restaurant is in. After a kitchen fire destroys part of the building, your landlord sues you for $250,000 in damages. Your General Liability insurance can help cover the costs associated with the property damage.
Scenario 2:
You need to rearrange the furniture in your business. After dragging the furniture to its new location, you realize you put deep scratches across the entire floor. You also damaged different sections of the walls. When your landlord sees the damage, they sue you for $30,000 in damages. Your general liability insurance can help cover the costs associated with the lawsuit.
Slip & Fall Incident
Scenario 1:
A customer slips and falls in your business after you mop the floor. As a result of the fall, they sprained their ankle and require two surgeries. They sue you for $110,000 in medical costs. Your General Liability insurance can help cover the costs associated with this bodily injury.
Scenario 2:
A customer’s child is running up and down your store’s aisles. Suddenly, the child trips, falls, and breaks their leg. As a result, the family sues you for $30,000 for the medical costs.
Your General Liability insurance can help cover these costs.
Product Liability Lawsuit
Scenario 1:
You own a coffee shop. Recently, you expanded your operation to sell actual coffee pots as well as coffee. However, after a customer purchases one from you, they get burned from hot water due to a faulty design. As a result, they sue you for $50,000 for their medical costs. Product liability insurance coverage can help cover these costs.
Customer Injury Lawsuit
Scenario:
A customer drops a heavy piece of merchandise on their foot. As a result, four toes are broken and they need surgery. They then sue you $50,000 for the medical costs. Your general liability insurance can help cover the costs associated.
Advertising Lawsuit
Scenario:
You spend a year creating a new advertising campaign with your trusted team members. After you finally launch it to the public, a company sues you for $150,000 for copyright infringement. Your general liability insurance can help cover the costs associated.
General Liability Coverages/Limits
Each Occurrence
The Each Occurrence limit is the most the insurer will pay for one occurrence for any loss arising from bodily injury or property damage to a third party.
Typical Limit: $1,000,000 (Most Contractual Requirements)
Other Limits: $100,000, $300,000, $500,000, $2M-$5M
An occurrence is defined as
1) an accident
2) an ongoing exposure to a harmful condition.
(Third party can include people like vendors, customers and bystanders)
General Aggregate
The General Aggregate limit is the maximum amount of insurance payable during any given annual policy period for all losses other than those arising from specified exposures.
If your General Liability policy carries a $1,000,000 Occurrence Limit with a $2,000,000 Aggregate Limit, it allows for a total $2,000,000 in claims payouts within one term, NOT TO EXCEED $1,000,000 Each Occurrence/Accident.
If there are 4 claims of $500,000 in one term, each claim falls within the $1,000,000 Per Occurrence Limit, but maxes out the General Aggregate Limit ($500,000 x 4 = $2,000,000). This makes it so the policy is not able to provide a payout if another claim were to occur due to the Aggregate Limit being capped out at $2,000,000. (4 claims of $500,000)
Personal & Advertising Injury
Personal & Advertising Injury (often called Coverage B) is automatically included in a General Liability policy. Coverage B covers damages claimed against the insured involving injuries OUTSIDE of bodily injury and property (physical loss).
Common Personal/Advertising Injury Losses
- Libel
- Slander
- Defamation of Character
- False Advertising
- Harmful Advertising
- Loss of Wages
The Personal & Advertising Injury limit applies not to each offense, but separately to each person or organization that sustains damages because of a covered offense
Products & Completed Operations
Products and Completed Operations Coverage provides financial protection in the face of lawsuits claiming bodily injury or property damage that come as a result of work that you have completed or a product you have manufactured, sold, or distributed. This coverage is typically included within commercial general liability insurance and helps protect businesses from liability once their work is done.
The “products” portion of Products and Completed Operations Coverage refers to any good or product that your business manufactured, sold, handled, distributed, or disposed of.
Anyone who sells a product or performs a work or service that has the potential to cause property damage or bodily injury should have Products and Completed Operations Coverage as part of a general liability policy.
Products and Completed Operations Coverage covers damages as a result of property damage or bodily injury that are brought on by your products or completed operations.
Damage to Rented Premises (Fire/Legal)
Damage to Rented Premises means coverage for damage caused by negligence on the part of the insured to premises rented to the named insured. If a fire occurs because of negligence of the insured and causes damage to property not rented to the insured, coverage would be provided under the occurrence limit.
This coverage is most common for tenants that rent their business space from a landlord. The coverage is automatically included as part of the General Liability coverage.
Typical Limits:
$50,000 - $300,000
The coverage for fire damage to rented premises is available only if you are legally liable for the damage. That is, the property damage must result from your business's negligence.
Medical Payments
Medical Payments coverage pays emergency medical expenses for bodily injury to you if you were hurt on someone else’s property. You do not have to prove that someone’s negligence (carelessness) caused your accident in order to get your medical bills paid from the Medical Payments portion of a CGL policy. Typical coverages include reimbursements for immediate medical costs like ambulance dispatch, copays etc.
Typical Limits:
$5,000 - $20,000
It does not have to be proven that someone’s negligence caused an accident in order for the Medical Payments portion of a CGL policy
General Liability Deductibles
General Liability Deductibles are determined either by the cost vs rating factor of the carrier, or the preference of the individual business owner.
The "Deductible" is the Out-of-Pocket amount the policyholder is responsible to pay the carrier for, prior to the carrier indemnifying the insured party and paying out the claim.
For example, if a carrier has determined that a claim is valued at $20,000 and the deductible is $1,000, the Policyholder will need to pay $1,000 prior to the carrier covering the remaining $19,000 indemnification amount.
Typical Deductibles:
$0 - $25,000
For more information on our General Liability program, please
submit an online request or reach out to a licensed agent today!
