Commercial General Liability Insurance

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Commercial General Liability Insurance FAQs

Got questions about commercial general liability insurance? Don’t worry - we’ve answered your biggest questions here:

What is General Liability Insurance?

Accidents can happen when you’re running a business. A customer might slip and fall in your store, or you might accidentally damage a client’s furniture during a home remodeling project. If you’re not protected with general liability insurance, you may be forced to pay for these accidents and damages from your own pocket.

General liability insurance provides your business with coverage against lawsuits and medical claims involving injury, property damages, and more. Having this type of coverage is essential for businesses that work with the public.

General liability insurance forms the foundation of protection for your business - so don’t get caught without it!

What Does General Liability Insurance Cover?

General liability insurance provides your business with coverage against lawsuits, medical claims, and legal costs. This insurance policy protects you and your business when third-parties (usually customers or vendors) are injured on your commercial property. It can also protect you against any damages you might cause on a client’s property.

For example, let’s say you’re in the middle of a roof replacement when it starts to rain. You cover the roof as best you can; however, leaking occurs and damages the client’s furniture, ceiling, and walls. Your general liability insurance policy will pay for the costs of replacing the damaged property, as well as any legal costs if the client decides to sue.

Typically, general liability covers:

  • Third-party injuries on your property
  • Third-party property damage
  • Product liability or damage
  • Slander & copyright infringement

General liability does not cover:

  • Employment discrimination claims
  • Professional mistakes
  • Workers compensation
  • Vehicles, boats, and other transport
  • And more

Do I Need General Liability Insurance?

You may need general liability insurance if your business works with the public. You may also be required to get a general liability policy if you want to secure larger contracts with customers and vendors. Your general liability insurance policy covers you against lawsuits for injury or property damage, whether it happened on your business’s premises or elsewhere.

Is General Liability Insurance Required By Law?

General liability insurance is not required by law, but it’s strongly recommended for business owners who work with the public. Having general liability insurance can also help you land bigger contracts with clients who require this protection.

How Does General Liability Insurance Work?

Let’s take a look at an example of how general liability insurance works:

A plumber is doing light repairs on pipes in a client’s remodeled bathroom. However, he doesn’t secure the caps as tightly as he should have, which causes considerable water damage in the new bathroom.

The plumber’s general liability insurance policy covers the $7500 costs of repairing the water damage. The only out-of-pocket expense the plumber has to pay is the policy deductible.

How Much General Liability Insurance Do I Need?

The amount of general liability insurance you’ll need depends on the type of work you do, as well as your clients’ requirements. You’ll also need to consider general liability insurance coverage limits when searching for a policy. For example, if you have a $1 million general liability insurance coverage limit, that’s the maximum amount your insurance company will pay in a policy year for any submitted claims.

Why is General Liability Coverage Important?

General liability coverage - sometimes called commercial liability insurance - is critical for businesses that deal with the public. It gives you the peace of mind you need to focus on your business, plus it can make customers more confident about working with you.

Accidents happen, even when you try to do everything right. General liability insurance means that if the worst happens, you and your family won’t be held financially accountable for any resulting lawsuits, medical costs, and property damage.

Any business that deals with customers or vendors should get general liability insurance. You may find that some clients won’t even work with businesses that don’t have liability coverage!

How Much Does General Liability Insurance Cost?

The cost of general liability insurance will depend on your specific business and the type of industry you’re operating in. For example, a cleaner who works in other people’s homes might need more coverage than a home-based bookkeeper, since the cleaner is exposed to more risks, like damaging client property. General liability insurance covers these damages, as well as any customer accidents that happen in your place of business.

What Is a General Liability Certificate and Why Do I Need It?

A certificate of liability insurance (COI) provides proof that your business is protected in case of any accidents or damages. Your general liability insurance certificate can play an important role in helping you land projects and contracts. For example, a contractor can use a general liability certificate to show that a customer won’t be held liable for any accidents, damages, or injuries that happen on his or her property, since the contractor has coverage.

You’ll be issued a general liability certificate once you purchase your insurance policy.

Is General Liability Insurance Based on Payroll?

The number of employees you have in your company will definitely play a role in how much you pay for business liability insurance. Think about it this way: The more employees you have, the greater the likelihood that they may end up causing damage in your office (like dropping a laptop) or on a client’s property.

When getting your general liability insurance quote, you should expect to be asked for the number of full-time and part-time employees in your business. Keep in mind you may be asked for the number of subcontractors or consultants you work with.

Is General Liability Insurance Tax Deductible?

In general, your general liability insurance premiums are tax deductible. That’s because the IRS considers your policy premium to be part of your business costs, which are deductible.

How Do I Get The Right Liability Coverage?

In order to find a general liability insurance policy that fits your needs, ask yourself the following questions:

  • Do you have any employees? If so, you may be legally required to take out workers compensation insurance.

  • What level of coverage do you need for your business?

  • What level of coverage do your clients require from your business?

  • Before you buy a policy, ask yourself: Are you truly covered for everything you need to run your business?