General Liability Insurance: Definition and How It Works?


General liability insurance is a type of business insurance that is designed to protect businesses from costs incurred during normal business operations.

Also called business liability insurance, it is a type of business insurance policy that offers coverage to an organization for bodily injury, personal injury, as well as property damage that happened while the business is in operation.

This insurance policy will take care of claims made by anyone against your insured enterprise, particularly when the issue comes from the organization’s work or a product sold that caused problems like illness and bodily injury. 


The Peculiarities of General Liability Insurance 

If your customer enters your company and slips on the recently cleaned floor and getting injured (like breaking an arm following the fall), a general liability insurance policy will take care of such. Another angle is if a person claimed libel as a result of an advert placed by your company. 

In any of these instances, your insurance policy should take care of the money to be spent on getting lawyers to defend your organization, as well as the expenses of settling the claims if need be. 

The insurance provider can purposefully raise the premium costs of the contract if your organization keeps claiming against its general liability insurance.

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Many insurance providers also sell what is called excess liability coverage.

Businesses can get this to cover claims that pass the limit of the standard general liability policy. Of course, some policies come with outright exclusions that restrict what actions are covered (like the costs accrued with a product recall).

What Is Not Covered Under General Liability Insurance?

The typical general liability insurance won’t cover intentional damages from your end.

The insurer won’t take care of expected damages as well as those that came as a result of pollution, automobiles, or additional liabilities you might take on.

Basically, if your business is quite risky (such as in alcohol-related businesses), it is advisable that you have additional insurance so your enterprise can be fully covered.

Generally, it is advisable to subscribe to other types of coverage that will cover specific issues that come up within a workplace. For instance, as your employees are increasing, you should get coverage against claims that have to do with discrimination and sexual harassment. 

How Much Does General Liability Insurance Cost?

There is no fixed cost for this policy, as what your business would pay is dependent on various factors, such as its size, the amount of coverage you need, as well as the degree of risk associated with the operations of your business. 

However, general liability insurance costs are around $88 a month to around $1,057 annually, although the average small business is said to pay an average cost of $42 per month for this coverage. 

An insurer can permit you to include other businesses or persons as “additional insured” under this policy, particularly when your enterprise enters into a contract with another entity.

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If you run a business today, it is very advisable to subscribe to this type of policy to help secure your enterprise from claims that occur during the usual business operations, including defense costs, physical injury, property damage, etc.

In the past, some businesses were affected by the financial burdens that came from unexpected accidents, and the third party chose to press ‘claim’ against them as a result of an injury that happened through the business operations, leading to expensive legal proceedings and very huge settlement payout when found to be responsible. 

Business owners must be determined to get all the necessary strands of business insurance that can help offer full protection to their investments.

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