General liability is insurance coverage that helps businesses to protect themselves against liability claims arising out of bodily injury, property damage, premises, business operations, products or completed operations, and advertising or personal injury.
This seems like a really vague definition, right? Well let’s breakdown each category and how it applies to your business.
1. Bodily Injury: a broad category covering premises, operations, products, and completed operations. Bodily injury is used to indicate physical injury to physical property.
a. Premises liability: applies to owners, landlords or tenants of a building. This usually applies to someone who hurts themselves while on your premises therefore making you liable for their injury
b. Business Operations liability: liability that arises while you are in the process of doing work. For example: an electrical contractor starts a fire while he is doing work on a customer’s building
c. Products liability: liability that arises out of the sale, distribution, or manufacturing of a product. Coverage only applies after a customer has received some type of injury after the product has left the business location
d. Completed Operations liability: this is very similar to business operations, however, the liability arises after the work has concluded. For example: a fire starts after the electrical contractor installs the faulty wiring and leaves the customer’s building
2. Personal and Advertising Injury. This category is used to cover losses that are intangible or can’t be seen physically. For example: someone’s reputation is intangible and ruining a reputation is an intangible loss.
a. Personal Injury liability: this is not physical harm to a customer as are the situations listed above. This liability comes from intentional libel or slander that is verbally spread and that can negatively affect another party and cause harm to their reputation or business
b. Advertising liability: this is also not a physical injury. The liability comes from misuse of someone else’s advertising ideas or copyright infringement that affects another party negatively or negatively affects someone’s business or income due to theft of ideas
After that short explanation, the most common question we then get (especially from small business owners) is: do I need general liability insurance? The answer is yes! General liability insurance covers a wide range of issues a business can run into. It covers both tangible and intangible losses and can really help protect small business owner in the event a claim arises.
General liability claims can be expensive and without it most businesses would shut down because they would be unable to pay a customer who suffered some kind of loss at their hands.
General liability is especially important for more high risk business practices such as construction fields or automotive repair shops; but even the local accounting office needs general liability insurance to protect themselves and their business.
Don’t put your business at risk just to save a little bit of money each year. General liability insurance is there to protect everything you have worked hard for and give you a resource in the event a mistake is made. Buy this resource! You never know when you may need to use it…