What is general liability insurance?
General liability insurance, also known as commercial general liability insurance (CGL) or liability insurance, is a broad insurance policy that protects businesses from multiple risks. It’s one of the most cost-efficient and effective ways to keep a business safe from unexpected costs arising from accidents, lawsuits, or any other action taken against your business.
Why does a large business need general liability insurance?
Whether you’re a small business or a large business, you will still need insurance. The size of your business doesn’t necessarily protect you from claims, and could harm your reputation if the right precautions aren’t taken.
General liability insurance will be your protection, in case your business activities injure a member of the public, or damage their property. Many businesses choose to sign up for insurance as soon as they start doing business, because mishaps can happen immediately, and you could be held legally liable. Moreover, if that person takes you to court, insurance can save you a ton of money by covering your legal costs and any compensation you might have to pay.
General liability insurance should be taken out no matter the size of your company – from a small stall to a large, listed company, to save it.
General liability insurance applies to a wide variety of businesses. If you have many in-person interactions with any clients, customers or partners, it’s an insurance well worth the price.
Business contracts, especially exchanges between large companies, often require insurance. Clients often want you to have insurance coverage before you sign a contract, to be more sure that you’ll be able to finish the job (for instance to protect you against bankruptcy). Many lessors also want you to have general liability insurance before they hand over a contract to you, to keep them safe too.
What does general liability insurance cover?
A general liability insurance policy can help to protect your business from:
- Third-party bodily injury: if someone sues you because they were injured on your property (for instance if a wall painting is unstable and falls on someone’s head, causing them to need extra medical assistance)
- Third-party property damage: if you or one of your employees damages someone else’s property (for instance if you smash your neighbour’s window)
- Reputational harm: if someone sues your business for libel or slander (for instance if you commented on another business’ products on the record and it is now affecting their business)
- Advertising injury: if another business in the industry claims your advertising looks too much like theirs, hurting their business
What can general liability insurance provide a company with?
If someone makes a claim against your business, general liability insurance can help to cover costs for various things:
- Judgements or settlements
- A legal team to represent your business
- Evidence fees
- Witness charges
It is important to note that general liability insurance does not cover things like employee injures – this will be covered by workers’ comp insurance, and damage to your own property, which is covered by commercial property insurance.
How much can general liability insurance cost?
The cost of general liability insurance depends on the type of business you run and the risks that are involved with it. Insurance can also depend on how many employees are on your payroll, and your history with insurance claims, which could make it a little more expensive.
The level of cover you want also affects your premium – the more you pay in, the more you will get out, so if your business type seems more at risk of getting sued or claimed against, it’s a good idea to pay more into insurance. An example of this would be demolition experts – manual businesses are generally seen as benign higher risk than clerical businesses.
It’s a good idea to note general liability insurance is tax deductible, as it counts as an allowable expense for businesses, so you can afford to pay a bit more into it.
If you want to read more on general liability insurance, TRUiC has a great deal of information about specifics on their website.
What other types of business insurance are good to have?
Apart from general liability insurance, it’s important to think about other covers you might need, depending on your circumstances. General liability insurance, as implied by the name, is very general, so it’s good for various businesses. However there are some insurances which are much more specific, and need to be researched first to determine if you really need them. Here are a few along with a brief description of them.
Professional indemnity insurance
This type of insurance is very important if your large business offers advice or a professional service to other businesses, or if you work with client data and intellectual property. If you happen to make any type of mistake, or not live up to standards put in place by the state and your agreement, the client could end up losing money, and sue you for this. Your professional indemnity insurance will help cover the compensation claims and legal costs, so you aren’t affected as much.
Just like general liability insurance, some businesses require their members to have this insurance.
Employers’ liability insurance
Most states actually require this insurance by law. Even if your state doesn’t, it’s a great insurance to have if your business employs staff – and being a large business you probably do. This type of insurance covers compensation claims that can be made by a member of staff due to any injuries, illnesses or some type of damage as a result of their work or workplace environment.
Product liability insurance
This type of business insurance is great for if you sell a physical product, rather than a service. This type of insurance can cover the cost of compensation claims if someone is injured or if their property is damaged by a product that is sold by you. In some cases you don’t even have to have manufactured the product – merely selling it means you are liable.