General Liability Insurance

General Liability Insurance, also known as Business Insurance or Commercial General Liability (CGL), is the backbone to your insurance portfolio. It protects your company from third party bodily injury and property damage losses.

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You may be asking "what exactly is a third party?" With any insurance policy, there are 3 parts: a first party, a second party, and a third party.

• The first party is someone working for your business.
• The second party is the insurance company.
• The third party is everyone else (a customer, for example).

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If your business is sued for an event involving the loss of a third party's property or bodily injury, then the insurance carrier will cover lawyer fees, settlements, and other legal expenses.

General Liability insurance covers third-party losses that derive from bodily injuries or property damage. Third parties are people that do not work for your business such as customer or clients. Below is an overview of some of the most common types of scenarios in which this coverage will protect your business:

• Bodily Injuries: If someone is seriously injured or in the worst case dies, your general liability insurance covers any related medical costs. For example, say you leave a floor wet at your facility and a customer slips and falls - a CGL policy will pay for the hospital bills.
• Property Damage: If your business or any operations connected to your business cause damage to a third parties property, your general liability insurance will compensate the damage and loss of use. For example, say one of your employee's has a meeting with a customer and accidentally knocks over a bucket of water which destroys computer equipment - a CGL policy will replace the property damaged.
• Personal & Advertising Injury:  Your general liability insurance protects you against lawsuits involving claims false arrest, wrongful eviction, malicious prosecution, infringing on some else's slogans, copyrights, or intellectual property, and libel or slander. For example, say you produce a promotional video and accidentally use another businesses logo - if the company sues you, the CGL policy will cover legal expenses.
• Product Liability: If you are creating products, selling products, or involved in any part of the supply chain, your business can be sued if those products happen to damage another person's property or cause injury. These claims do not need to occur on your premises and often happen away out of your control. For example, say you put your label on a product that another company makes and the customer becomes ill - the CGL policy will pay for medical bill and legal defense if you are sued.

ADVISOR TIP: Your General Liability policy is one of the most important elements of your risk management portfolio. It will pay for lawyers, settlements, and other costs associated with third party property damage and liability claims.

There are a ton of misconceptions about the coverage provided by a General Liability policy, so it's important to understand what is not covered. Below are some of the most common examples that are not included:

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• Worker Injuries: If an employee or person working for your business is injured during employment, this is covered under a workers compensation & employers liability policy. Again, a worker is considered first party. A customer or client is considered third party. Your workers compensation policy will pay for medical bills if a workers is injured, not your general liability policy.
• Employment Practices Lawsuits: Today, claims due to sexual harassment, discrimination, and wrongful termination are not uncommon. An Employment Practices Liability Insurance Policy (EPLI) protects your business from claims due to employment issues. Again, a General Liability policy protects you from third party related claims, any first party (ie, your workers) is provided with a separate insurance policy.
• Professional Mistakes: If your business provides advice or professional services and the business is sued due to poor advice, a professional liability policy, also known as Errors & Omissions insurance, will pay for legal expenses to defend your business.
• Your Business Property: Any property owned or rented by your business is not covered by a general liability policy. It may be covered under your Business Owners Policy, which typically includes general liability insurance, however, any property needs to be underwritten on a separate insurance policy.

If you are a business owner, or someone working on starting a business, you need to consider a general liability policy. As soon as you start any business operations you are exposed to lawsuits and claims associated with your operations. Often people think that insurance is only for large businesses or operations that are visible to the public, but that's not the case.

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A general liability policy is a wise investment and can give you a peace of mind as you start or continue to operate your business. It's important to work with an experienced advisor to ensure the policy is classified correctly and coverage limits are adequate. In addition, the insurance carriers financial health and rating are important to consider.

The price of your general liability policy is based off numerous factors such as the industry, your projected annual sales, and safeguards to prevent third party losses. Industries that have higher chances of injuries like construction, manufacturing, and production will have higher rates. Industries that operate within offices typically have lower rates.

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General Liability premiums for new companies range from $500 to $5,000 a year. For larger, well-established business, the premium ranges from $50,000 $150,000 a year. If you're a small business with a handful of employees and operate out of an office, you can expect to be on the lower end. If your business employee lots of people doing physical work then you should expect to pay more.

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ADVISOR TIP: It's not a one size fits all type of coverage, and the price certainly changes with the operations. That said, your insurance advisor will approach the insurance market to investigate the best coverage at the lowest premium.