FRIDAY, APRIL 30, 2021
What is General Liability?
If you have started or ever planned on starting a business, you likely have heard of general liability insurance. This insurance is owned by businesses of various size, industry and location, but what does it cover? What is “general liability?”
Liability is a term that refers to being responsible for something, particularly in legal matters. It has a second meaning as well. In this second meaning, liability is a person or a thing whose mere presence creates an increase of risk.
The insurance angle of liability covers both these definitions. When you run a retail store, you face liability in the sense that you will be held responsible should something happen on your store’s property. Your store itself is a liability, as well, in the sense that it introduces a new set of risks for you to manage.
All insurance, in some way or another, is a kind of liability coverage. When you buy coverage, you are covering all those what ifs that you invite by driving a car, owning a home or running a business.
General liability insurance is so named because it covers general risks. If you are sued or otherwise held responsible for injuries or damages that occur on your business’ property, your general liability insurance will pay for the damages up to the limits specified on your policy.
Is Anything Not Covered by General Liability Insurance?
General liability is not the only liability you will face.
Note that there are multiple exceptions to general liability insurance:
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Professional liability. Professional liability insurance covers claims of professional negligence whereas general liability only covers non-professional negligence. If you or an employee makes a mistake that causes a client money, the damages may be covered under professional liability insurance.
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Employee injuries. These will typically be covered under your workers compensation policy.
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Property owned by the business. To protect your business’ physical property and assets, you will need forms of commercial property insurance. Thankfully, you can often bundle general liability and commercial property insurance into a single business owners policy (BOP).
In fact, you can combine a lot of different coverages into a BOP in order to protect your business against the various forms of liability. Also keep in mind that general liability insurance policies have limits when it comes to not only the type of coverage, but the amount. An umbrella liability insurance policy can step in to fill the gaps of your general liability insurance policy if it reaches the maximum amount of coverage for a claim.
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