5 Common misconceptions about General Liability insurance debunked

General liability insurance, sometimes called commercial general liability insurance, is a must for nearly every business. Yet it’s often misunderstood, and businesses that need it often don’t have it. General liability insurance covers third-party (i.e., someone else’s) claims that you are liable for property damage, bodily injury, or personal or advertising injury.

Here is a list of common misconceptions about general liability insurance, and the truth about this important coverage.

Myth #1: My business is too small to need insurance

Any business can be sued, or an accident can happen for which you are liable. If someone (other than you or an employee) suffers an injury, or their property is damaged, you may be held responsible for the costs. This can include the cost to repair or replace a damaged item, or medical costs and lost wages due to an injury.

General liability insurance can also cover personal injury, which includes libel and slander, and advertising injury. If you or an employee post something on social media that’s false and defamatory, your business could be sued. If you inadvertently use a copyrighted slogan or image in your advertising, you could face an infringement lawsuit. In both of these cases, a general liability insurance policy may cover your costs, including defense costs and a settlement or judgment.

🎯 Truth: The size of your business has very little to do with the likelihood that you’ll get sued, but it has a lot to do with your ability to withstand the financial consequences of a lawsuit. When you consider that the general liability insurance cost for a year could be less than the cost of a few hours of an attorney’s time, it’s a no-brainer.

Myth #2: I would never get sued

This misconception is common among businesses that have contracts in place or that require customers to sign a waiver of some kind. Contracts and waivers are important risk management tools, but, unfortunately, they do not prevent claims or lawsuits. Even if a lawsuit or claim is found to be without merit, your business will still incur costs to defend itself. You will likely need to hire an attorney to defend yourself and your business, even if the case never goes to court.

🎯 Truth: In today’s litigious environment, a business can be sued for just about anything, no matter their size, industry, or even whether they made a mistake or not. Having general liability insurance is a smart defense against risks you can’t control.

Myth #3: General liability insurance covers everything

While just about every business needs general liability insurance, there are other types of insurance a business may need as well. What you need depends on the type of business you have, the products and/or services you provide, whether you have employees, and other factors.

General liability insurance is a good start, but here are some other types of business insurance and why you may need them.

A business owner’s policy, or BOP, includes general liability coverage plus coverage for your own business property. If you have tools or equipment that you need to do your job, a BOP may make sense for you. In addition to coverage for third-party claims of bodily injury, property damage, and personal and advertising injury, a BOP can also cover first party (your own) claims of property damage. So, if your computer is damaged or your tools are stolen, a BOP may cover the cost to replace them and get you back to work.

Note that a BOP includes general liability coverage, so you don’t need both.

Professional liability insurance, sometimes called errors and omissions or E&O coverage, covers claims that arise from your professional services. This means that if you do something you shouldn’t have (an error) or you don’t do something you should have (an omission) in the course of your work, a professional liability insurance policy could protect you. If you provide advice to clients, consider professional liability insurance.

Cyber security insurance covers costs you may incur due to a data breach or other cyber incident. If your computer system is compromised, you could be covered for the costs to notify customers, comply with regulations, recover your data, and more.

Worker’s compensation insurance covers medical costs and lost wages if an employee becomes ill or is injured on the job. It’s required in most states.  

🎯 Truth: A general liability policy covers other people’s claims of bodily injury, property damage, personal injury and advertising injury. It doesn’t cover claims of faulty workmanship, cyber incidents, injuries to you or your employees, or damage to your business property.

Myth #4: My homeowner’s insurance will cover my home-based business

Read your homeowner’s insurance policy carefully. It may not protect you if you have clients coming to your home for business reasons, and it very likely won’t protect you if you are going to client locations or outside venues as part of your work. Many homeowner’s policies specifically exclude accidents or damage related to business activities in the home.

🎯 Truth: To protect your business, you need business insurance. General liability insurance is the foundational coverage that nearly every business should consider to be protected from claims of bodily injury, property damage, and potentially more by third parties.

Myth #5: General liability insurance is too expensive for my small business

This is a very common misconception about general liability insurance, and it’s one of the most easily debunked. General liability insurance is generally a lot less expensive than the cost of a claim or lawsuit. A general liability insurance policy can cost as little as $30 per month, depending on  your business needs. Compare that to the cost of hiring your own attorney, which can be several hundred dollars per hour.

🎯 Truth: Most business owners who think the cost of general liability insurance is too high don’t know what their actual cost would be. Get a quote for general liability insurance for your business today and see how much you will actually pay.