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Do I need general liability insurance?


As a business owner, purchasing general liability insurance is one of the most vital decisions you must make.  This important coverage protects your business assets in the event that you or your employees are accused of causing personal injury or property damage in the course of your business.

For example, coverage is provided for injuries caused to a client who trips and falls when visiting your business premises.

Why buy general liability insurance?

In today’s litigious society, companies cannot be too protected against potential lawsuits. The costs of a single lawsuit can quickly balloon out of control.

Even fraudulent claims have a financial impact on your business – you still have to defend yourself even if the claim against you has no merit at all – and this will be expensive.

General liability insurance protects against damages arising out of claims of property damage, bodily injury (not related to your services), slander, and libel, and the medical expenses, defense costs and judgments awarded as a result of those claims.

This ensures that your business will not be forced to close its doors after enduring a lawsuit.

Choosing coverage amounts

Coverage levels are determined by the perceived risk to your business.

The higher the risk of damage occurring, or the higher the potential for expensive damage, the higher the coverage level you should select.  Construction companies operating large machinery potentially have a greater risk of causing damage than a software development firm.

However, both types of businesses need  general liability insurance.

Additionally, home-based businesses should not assume they do not need this coverage.   If you visit clients’ premises or have clients visit you, you need the coverage.

Business location also has a bearing on the level of coverage needed.  Some states have historically awarded larger settlements in liability claims.  If you operate in one of these states, a higher level is recommended.

When selecting a coverage level, be sure to consider how much money your company can afford to pay out in the event of a lost court case.  A $2 million policy may seem sufficient, but if your company is found liable to the tune of $2.5 million, your company is on the hook for $500,000.

The best insurance policy is the one your business never needs to use. Operating your business in a safe and ethical manner will reduce the possibility of damage claims arising.

However, not all risks can be perceived or prevented.

In the event that a lawsuit is filed against your business, a comprehensive general liability insurance policy will ensure the survival of your life’s work.

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