General liability insurance for small business – also known as Commercial
General Liability (CGL) – is a form of protection for your company against the
possible occurrence of certain types of lawsuit. It can also cover the cost of
defending or settling claims, whether or not those claims are legitimate. These
policies will typically cover the legal costs as well as the damages that occur
as a result of the lawsuit. Depending on the type of business that you have,
general liability insurance for small business may be the only form of liability
insurance required.
What is Covered by General Liability Insurance?
There are four primary types of claim against which you are protected with
liability insurance for small business. These are:
-
Property
damage – this includes any damage that has been made to a third party’s
property by one of your employees or by your business in general.
-
Bodily injury
– this includes any kind of personal physical harm to a third party by one of
your employees or by your business in general.
-
Personal
injury – this includes any damage that has been done as a result of libel or
slander – disparaging statements that are written or spoken – to the
organization, products, services, or person of a third party.
-
Advertising
injury – this includes any damage that has resulted from advertising – written
or spoken – that is libelous or slanderous to the organization, products,
services, or person of a third party.
Do You Need General Liability Insurance?
About three quarters of all American businesses are either sole proprietorships
or are partnerships. This type of business ownership can place both business
and personal liabilities at risk in the event of a lawsuit. General liability
insurance for business can create an important barrier between your
personal and business assets and complete financial ruin. Though many people
believe that by forming a limited liability company (LLC) or by incorporating,
they have protected themselves from personal liability and therefore there is no
requirement for general liability insurance, there is still
the potential for personal liability in certain circumstances. This can include
(but is not limited to) situations where:
-
You have
personally caused injury to someone
-
You have
signed a personal guarantee for a loan
-
Your business
is not operated as a separate entity
-
You have
behaved irresponsibly or illegally in your business
How Much Does General Liability Insurance for Small Business Cost?
There is no single liability insurance rate that is
standard across the industry, so it is impossible to offer an average rate for
this form of protection. This is because there are a number of different
factors that contribute to the cost of a general liability insurance policy. These include:
-
Your business
industry
-
The size of
your business sector within that industry
-
The size of
the company
-
The number of
employees it has
-
Your company’s
revenue
-
Whether the
general liability insurance for small business policy will be taken out alone
or combined with other types of business liability insurance.
Not all types of claim against your company are covered by liability
insurance, so it is important to understand your policy and
know when it is adequate on its own, or when additional types of insurance will
be required. That said, general liability insurance for small business should
be considered the very basic essential form of liability insurance for your
company.
