In today's business environment, the fear of a lawsuit is not a matter of if, but when for most business owners. Business liability insurance coverage is no longer a discretionary expense, and operating a company without general liability insurance literally places the entire business at risk every day.
Since no one wants to see their hard work vaporize overnight, almost all businesses that are profitable or have assets will want to protect future earnings with various insurance policies including general liability. Unless you work in the insurance industry or have prior experience buying liability insurance, you may not know what's included. Unlike property insurance that protects your businesses assets in case of a loss, liability insurance protects you from losses as a result of a court case. Let's take a look what is and what is not covered with general liability, subject of course to policy limits and language.
What can be included in a general liability insurance policy:
Bodily injury damages – For example, someone slips and falls inside your store because a bag of marbles broke open and dumped on the floor. Another example may be someone gets hurt from the use of your product, or even as a result of advertising.
Expenses related to defending a lawsuit including attorney fees, investigation costs, bond postings, medical expenses, expert testimony costs, and other litigation expenses. In my opinion, this is the most significant one because the costs of litigation alone can break many small businesses. Predatory lawsuits happen everyday and can force a business that is in the right to still have to cut a check because it's often cheaper than defending a frivolous case.
Actions of your full-time employees and temporary staff.
Damage to third party property.
Electronic data liability.
Other liability protections that you will want to talk to your agent about to gain a clear understanding of the overages available.
What is usually NOT covered in a typical general liability insurance policy:
Your company's property.
Vehicles, boats, ATVs, snowmobiles
Personal identifiable information
Employee injuries – You're required in most cases to have worker's compensation insurance in place if you have employees.
Professional mistakes – Errors and omissions insurance is used by insurance agents, real estate professionals, attorneys and others.
Auto-related coverage – Similar to homeowner's insurance limitations, commercial liability insurance doesn't cover against claims made as a result of vehicle use. You will want to have commercial auto insurance to protect your vehicle when used for business purposes, and for company owned vehicles.