General Liability Insurance: Policy Details, Coverage Options, and Risks

In today’s society, business owners are at greater risk than ever before of facing a lawsuit. No matter what type of business you own and operate, a lawsuit – no matter how frivolous — can result in thousands or even millions of dollars in legal expenses and settlement payments. As recently as 2012, legal analysts suggested that over 15 million civil cases are filed annually in the United States alone, and the numbers have risen since then. The national cost is staggering: over two percent of the U.S. Gross Domestic Product (GDP), a measure of a country’s economic output, goes to tort costs each year.

What can you do to protect your business and its assets from legal claims? General liability insurance is a potential solution. This specialized business insurance policy provides coverage against certain risks a business owner will face as part of his or her operation. Let’s explore general liability insurance in more detail.

What is General Liability Insurance?

Designed specifically for businesses of all types, general liability insurance (GLI) is a policy that covers losses arising from property damage, real or alleged bodily injury, and personal injuries occurring on business property or resulting from business operations. Imagine if someone visiting your business becomes injured; he or she may file a lawsuit against your business, and you may be liable for any damages or injury that occurs on your business premises. As might be imagined, this can be a very expensive proposition in both legal expenses and potential damage awards or settlement payments.

Bodily injury – GLI covers costs associated with medical care, loss of business services, and financial restitution for deaths resulting from such an injury. This insurance typically also covers legal fees arising from bodily injury claims.

Property damage – GLI policies cover losses associated with physical damage, loss, or loss of use of property. This can include liability coverage if a business rents premises from a landlord. Typical coverage includes property damage or loss arising from a business’s operations, products, and/or services.

What Doesn’t General Liability Insurance Cover?

While general liability insurance policies are a valuable option for business asset protection against legal claims, there are several aspects these policies do not provide coverage for. GLI policies generally don’t cover:

*Punitive damages (most U.S. states)
*Intentional acts that result in property damage or bodily injury
*Automobile accidents
*Employee injuries in the workplace
*Workers’ compensation
*Workmanship of products or services
*Professional mistakes (sometimes known as errors & omissions)

There are specific business-oriented insurance policies that protect against these unique risks, but GLI policies are not typically sufficient to cover all potential risks. GLI policies may be bundled into a more comprehensive insurance package known as a Business Owners Policy or BOP. Even with the enhanced protection afforded by a BOP, there exist other risks that are not covered under these policies. Speak to your business insurance professional today to learn more about business insurance protection, including general liability insurance. Protecting your financial assets from loss due to injury or property damage claims is the key to the continued operation, regardless of your business.

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