What Is General Liability Insurance for Small Businesses?

As a small business owner, you need insurance to protect your business against unexpected things that might happen at your location.
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General Liability Insurance for Small Businesses

Written by Brian Greenberg

Last updated: September 19th, 2022

Reviewed by Paige Geisler

What happens if someone is injured, one of your employees inadvertently damages the property of a customer or a competitor accuses you of damaging their reputation? In all these situations, general liability insurance can provide the protection you need.

What is General Liability Insurance for Small Businesses?

Just about every small business needs general liability insurance. General liability insurance protects your small business against claims other people may make regarding bodily injury, personal injury, or property damage. It can help cover medical expenses, attorneys’ fees, and repair or replacement of damaged property whenever your company is held legally responsible.

What Does General Liability Insurance Cover?

A general liability policy covers three basic categories of claims: bodily injury, property damage, and personal injury. When a customer receives a physical or bodily injury due to something your business caused, a general liability policy can pay the medical expenses involved. For example, insurance would help pay for treatment if a customer slips and falls on your premises when you don’t have any wet floor signs in plain sight.

If your business or employees cause property damage through an accident, such as scratching a customer’s car while cleaning it, general liability insurance will pay for repairs or replacements. Personal injuries involve damage to a person’s reputation through libel or slander. If your business is accused of this, general liability insurance will help pay for your legal costs, including payments to a lawyer and court fees.

A general liability policy won’t cover damage due to auto accidents, employee injuries, intentional actions, professional mistakes or malpractice, or flaws in workmanship. In most states, it also doesn’t cover any punitive damage costs. This type of policy is designed to protect you and your business from any negligence that might occur and cause bodily injury, personal injury, or property damage.

Does a Small Business Need Liability Insurance?

All small businesses need liability insurance to protect against the costs involved with bodily injuries, personal injuries, and property damage. Without liability insurance, you could be responsible for enormous medical or legal expenses, as well as any damages incurred by clients or other entities. This can impact not only the finances that keep the business running, but it can also take money from your personal accounts and leave you with nothing to live on.

Your general liability insurance covers the actual cost of damages, up to the limit of your policy, and legal expenses. Keep in mind that depending on your type of business, you may also need other types of coverage to fully protect your company. Commercial property insurance, workers’ compensation insurance, professional malpractice insurance, and commercial auto insurance are all options to consider when starting up your business.

How Much Does General Liability Insurance Cost?

The cost of general liability insurance depends on a combination of factors, including the industry you’re in, location, size of your policy, size of your business, and claims history. Almost all small businesses can purchase general liability insurance for under $50 per month. If you opt for a higher deductible, you may be able to lower your monthly premium even further. The most important factor about this type of liability coverage is making sure you have enough to protect yourself and the assets of your business. Rather than focusing on price, zero in on how much coverage is needed in relation to the most obvious risks and hazards. Any insurance agent will be happy to help you discover how much coverage you need to protect yourself.

Does General Liability Insurance Protect a Business from Lawsuits?

A general liability insurance policy does protect your business against certain types of lawsuits. These include slander and libel claims, as well as false advertising claims. For many businesses, the most important protection is against lawsuits involving slip-and-fall accidents or other accidents that cause customers or vendors to injure themselves on your premises. Your general liability insurance covers both the actual cost of damages, up to the limit of your policy, and your legal expenses.

Where Can You Get a General Liability Policy for Your Business?

Most major insurance companies sell general liability policies. We can help you compare general liability insurance carriers, so you can find the right policy to fit your unique business needs.

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