General Liability Insurance

Understanding general liability insurance is easy. This type of insurance policy protects businesses against property damage claims and personal injuries. It does this in two ways; it pays damages up to the policy limit and provides experienced legal help to companies in trouble. The only decision any business owner or manager needs to make is how much insurance to buy.

What General Liability Insurance Covers

This policy covers property damage and personal injuries caused by the business or an employee. This could be a simple as a company-owned truck striking a car at an intersection, running over the neighbouring businesses neon sign or slipping out of gear and wiping out a roll of new cars. A customer may slip and fall on spilled water in the reception area, walk off the new deck under construction before the rail was in place or trip over an electric cord on the sidewalk.

How This Insurance Works

As soon as the business is aware of a problem, the business contacts the insurance company alerting them to the potential dilemma. Once the insurance company is aware of a possible claim, they will instruct their policyholder to forward any correspondence or lawsuit to them.

After the business documents the incident as fully as possible, the business provides the information to the insurance company when requested. In the meanwhile, the business simply goes back to its operations leaving this expensive, time-consuming legal matter in the capable hands of the insurance provider and their legal department.

Under this general policy, the insurance company has the following obligations: to defend the policyholder, to pay costs up to the liability limit and in some jurisdictions settle reasonable clear lawsuits. This means business owners and managers do not need to waste precious time trying to find a competent lawyer to handle these issues. The insurance company already has a list of litigators experienced in that industry ready to protect the business, negotiate a settlement or write a check. The cost of these expensive, experienced attorneys, court fees, depositions, investigations, expert witnesses and filing fees is covered by the insurance policy. While the attorney works to settle or eliminate the problem, the business continues to operate, grow and thrive.

The Most Important Decision

The most important decision any business operator makes is the amount of liability insurance to purchase. Liability limits depend on the industry and location. Some trades, like heavy machinery manufacturing, expose people to more serious risks than others, like bakeries. Likewise, some states are more generous in awards to injured parties. A high-risk business in one of these states needs higher limits. If the company is sued for $5 million and the liability limit is $2 million, the business itself is responsible for any settlement or award over the $2 million limit.

Liability limits under this general policy pay for property damage and personal injuries. In addition, insurance companies pay attorneys and defence costs, allowing businesses to concentrate on key business activities. Buying insurance with higher limits provides even more protection.