Everything You Need To Know To Better Understand General Liability Insurance
- What Does General Liability Insurance Cover?
- What Is The Normal General Liability Limit?
- What Is The Difference Between Occurrence Form And Claims Made Form?
- How Much Does A General Liability Policy Cost?
Whether you need answers to these questions or just want a General Liability Insurance quote, you’ve come to the right place
What Does General Liability Insurance Cover?
General Liability Insurance is one of the most commonly purchased types of commercial insurance policies.
Whether you own a construction business, law practice, bakery, manufacturing plant or a non-profit business, you are at risk of having a lawsuit filed against you.
A General Liability Insurance Policy will help protect you and your business from this threat. While most companies are not required by law to maintain General Liability Insurance, this coverage is something that every business needs.
Premises Liability is what most people associate with General Liability Claims! This coverage protects your business from Bodily Injury and Property Claims as a result of negligence on YOUR Property.
What if someone comes into you place of business and trips over some boxes that were laying on your floor. That person falls and breaks his wrist!
Your business could be sued for the bodily injury (medical expenses and related expenses) that results from your negligence.
A properly structured GL Policy will cover your business.
Business Operations Liability
Business Operations Liability protects your business from Bodily Injury and Property Damage Claims that occur during the course of your normal business operations AWAY from your premises.
Assume you are a Heating & Air Contractor (HVAC).
While you are at a customer’s home installing a new Heat Pump, you drop the unit and it falls and causes damage to the customers hardwood floors.
The direct physical damage to the floor would be covered by your General Liability Policy.
Products Liability protects your business for Bodily Injury And Property Damage Claims that are a direct result from the products you sell and/or manufacture. It is important to note that these losses MUST occur away from your premises.
Over the years there have been numerous stories where products produced in China (think toys) have been sold in the United States and are found to have been made in a fashion that causes injuries to children.
The claims brought against the company by the parents of the injured children would be covered under Products Liability.
Completed Operations Liability
Completed Operations Liability protects your business for Bodily Injury And Property Damage Claims that arise from your Business Operations. It is important to note that these losses MUST occur away from your premises.
Assume you take your car to an Auto Repair Shop to have your oil changed.
After you leave the shop your engine locks up and breaks. Upon investigation, the engine had lost all of its oil because the Oil Filter fell off. As it happened, the mechanic put the wrong Oil Filter on which resulted in the filter falling off.
The Auto Repair Shop is covered for the damages to the customers vehicle by the Completed Operations section of the General Liability Policy.
Personal Injury Liability
Personal Injury Liability protects your business from claims other than Bodily Injury And Property Damage. Personal Injury would include: false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction; slander; libel; and invasion of privacy.
Assume a local business files a lawsuit against one of its customers.
During the course of the trial, it is proven that the business brought suit against the customer without probable cause or proper cause. It was further determined that the business owner initiated the suit as a way of “getting back” at the customer for a personal dispute that had nothing to do with the business. The court found that the suit was brough with ill will as the motivation and the trial ended in favor of the local customer. The customer then sues the business for wrongfully binging the legal proceeding; the person or organization that brought the action (who now is a defendant in the malicious prosecution case) is covered by their CGL, subject to exclusions.
Advertising Liability protects your business from claims other than Bodily Injury And Property Damage. Advertising Liability insures the following offenses in connection with the insured’s advertising of its goods or services: libel, slander, invasion of privacy, copyright infringement, and misappropriation of advertising ideas.
Assume a new restaurant is opened in your local community.
The Restaurant focuses on casual dining and is named “McDowells” after the business owner. The logo for the restaurant includes a large letter “M” that is painted bright yellow. While the name and logo aren’t a direct match for McDonald’s…the local restaurant is sued for Copyright Infingement. The business’s Advertising Liability section of the GL Policy would defend the business against this lawsuit.
Medical Payments reimburses others, regardless of fault, for medical or funeral expenses that arise as a result of Bodily Injury or Death. This coverage is often used as a Goodwill Coverage to reduce the chances of a lawsuit being brought against the business.
In our Premises Liability claim example above, a person tripped over some boxes that had been negligently kept in a walkway and broke his wrist.
Let’s assume that the person that instead of tripping over the boxes, the patron simply fell and injured himself. The business could file a claim under the Medical Payments section of their General Liability Insurance Policy to help pay for his injuries!
What Is The Normal General Liability Limit?
The Standard General Liability Coverage Limits are shown as follows:
- Bodily Injury & Property Damage – Each Occurrence
- Bodily Injury & Property Damage – General Aggregate
- Personal & Advertising Injury
- Damage To Premises Rented To You / Fire Damage
- Products and Completed Operations
- Medical Payments
Most General Liability Policies provide $1,000,000 Of Occurrence Liability, but the full policy limits may look like this:
- $1,000,000 – Bodily Injury & Property Damage – Each Occurrence
- $2,000,000 – Bodily Injury & Property Damage – General Aggregate
- $1,000,000 – Personal & Advertising Injury
- $300,000 – Damage To Premises Rented To You / Fire Damage
- $1,000,000 – Products and Completed Operations
- $5,000 – Medical Payments
However, there are other options, both lower and higher than a business can choose.
Unsure of what limit is right for your business? Contact an ALLCHOICE Advisor to discuss your options
What Is The Difference Between Occurrence Form And Claims Made Form?
There are actually two types of General Liability Insurance Policies.
What makes these two types different is the “when” coverage is present.
General Liability Occurrence Form
The most common type today are “Occurrence” Forms. A General Liability Insurance Form that is on an “Occurrence” Form will pay General Liability Claims as long there was coverage in force at the time of loss.
Example Of An Occurrence Form Claim GL Claim
You own a Bakery that provide…baked goods (surprise). You bake a batch of pastries that made everyone that ate them sick (due to bad ingredients). The people that get sick sue your bakery for the hospital bills. Ate the date of loss you had a General Liability Policy. Are you covered? The answer is yes! Because the loss OCCURRED while you had an insurance policy in force, you have coverage. Now, let’s change the story a little. Assume that you opened a bakery, purchased General Liability Policy, and after one month you go out of business due to the fact that you were not a good baker. Since you went out of business, you canceled your General Liability Insurance. The week after you closed everyone that purchased muffins from you fell ill due to food poisoning. Are you covered? Your insurance policy is not in force when the claims are filed…but the good news is you are covered since your policy was in force when the actual poisoning took place!
General Liability Claims Made Form
A “Claims Made” General Liability Policy, coverage is present and will be paid by the policy that is in force at the date on which the claim is made.
Example Of A Claims Made GL Claim
We will use our example from above! The first claim occurs and is filed while the policy is in force. Are you covered? Yes! Under the second scenario, the occurrence happens while you have coverage but the claims are filed after you have canceled your policy…are you covered? The answer is NO! There was no coverage at the time the Claim was filed.
How Much Does A General Liability Policy Cost?
General Liability Rating Factors
Type Of Business
General Liability Insurance Rates are determined by the type of business (what the business does).
As you can imagine, certain types of business have more risk, thus demand greater premiums.
The rating basis can be one of many things.
- Square Footage.
General Liability Premium
General Liability Insurance Premiums can vary dramatically.
Most Carriers charge a minimum premium for all businesses that range between $200 & $500 annually.
To the contrary, a business like General Electric may pay MILLIONS of dollars annually for their General Liability Insurance.