Every business dealing with the public faces risk of lawsuits. There are many insurance coverages are available to combat these, including general liability.
General liability insurance helps with legal expenses if your business is sued due to:
- Bodily injury
- Property damage
- Personal or advertising injury (includes libel, slander, malicious prosecution, infringing on copyright, etc.)
These incidents are only covered by general liability due to non-professional negligent acts. This means if ordinary mistakes or everyday business activity causes bodily injury, property damage or personal/advertising injury to a client or guest.
There are many incidents that general liability doesn’t cover, however. This insurance doesn’t cover employee injuries, criminal acts, lawsuits due to discrimination or lawsuits filed against your employees. Luckily, there are several different coverages available for nearly every type of lawsuit. Other liability coverages include:
- Workers Compensation. Workers compensation steps in if an employee is injured at work. It helps cover medical expenses and can also help if the employee decides to sue for the injury.
- Employment Practices Liability. This liability insurance covers legal fees if an employee—or potential employee—decides to sue the company concerning poor employment practices. This includes sexual harassment, discrimination, wrongful termination, etc.
- Professional Liability. This insurance protects the business when lawsuits arise due to professional negligence that causes the client to lose money. For example, if an accountant’s clerical error causes the client to lose money. Professional liability is also known as Errors and Omissions Insurance.
- Pollution Liability. Certain businesses work with chemicals or produce pollution. Pollution liability helps pay for damages the pollution causes as well as lawsuits arising from those damages.
- Directors and Officers Liability (D&O Insurance). If someone sues one of your directors or officers, this policy protects the company and directors against lawsuits. This also excludes criminal acts such as fraud or personal profiting.
- Liquor Liability. Some businesses serve alcohol, such as gas stations and restaurants. Liquor liability helps pay for damages and protects the business from any damage or injury a patron causes after purchasing alcohol at their establishment. This doesn’t cover the negligent serving of alcohol to a drunk patron, however.
- Cyber Liability. Cyber liability helps if there is a data breach or other cyber attack on the information your business stores online. Cyberattacks are unfortunately common, and cyber liability insurance can help if your company is sued due to stolen information or money.
Do I Need General Liability Insurance for My Business?
Most states do not require general liability insurance for businesses, but highly recommend it. Texas does not require businesses to carry general liability or workers compensation, but both are incredibly important for companies that want to avoid expensive lawsuits.
How Much Does General Liability Insurance Cost?
The cost of general liability insurance varies. The size of the business, the policy limits, claims history and industry all account for the cost of general liability insurance. On average, businesses pay a median of $500 a year for general liability insurance. Keep in mind that the longer a lawsuit lasts, the more expensive it will be. General liability lawsuits generally come in millions. For example, you may pay $500 a year for a $1 million policy. Be sure to consider the risk of lawsuits and purchase insurance accordingly. Certain industries are more likely to be sued than others. For general liability, restaurants and stores should be concerned about injuries due to slips and falls. Even if your general liability insurance offers medical payment to an injured customer, the victim could refuse help and choose to sue instead. Lawsuits are expensive, so make sure your business is covered.
Also Read: General Liability Insurance Claims for Back Pain From Customers