Is General Liability Insurance Enough for Your Business?
March 26, 2018
Does General Liability Insurance Cover All of Your Company's Needs?
Based on its name alone, you might assume that general liability insurance is a catch-all policy that covers all of your business's needs. However, this is far from the case. Although liability coverage is undeniably useful, certain types of specialized risks require dedicated insurance coverage.
By offering specific forms of coverages separately, insurance companies allow business owners to buy only the protection they need and avoid the expense of unnecessary insurance products. Depending on your situation, you may need to purchase several types of coverage to fully protect yourself and your company's assets. In some cases, general liability insurance may not be necessary at all; you may do better with a different type of policy. Understanding your options will help you make the right choice for your business insurance needs.
Who Needs General Liability Insurance?
Liability insurance protects your business from litigation in the event that someone decides to sue you. Businesses require protection of this kind because they can be an attractive target for lawsuits. Depending on the type of business you have, you may be at higher risk of litigation as a result of what your company handles.
Many common scenarios could result in litigation:
- A customer falling on a slippery floor in your shop, injuring a hip
- Accidentally causing damage to a customer's property while you are performing your services
- An employee bad-mouthing a client in a way that could be viewed as slander
For these and many other circumstances, liability insurance can provide financial compensation to the injured party while keeping you out of court.
If you are not sure whether your business needs general liability insurance, ask yourself a few questions:
- Do customers or clients come to your premises?
- Do you have contractors or employees working at your location?
- Do employees go out to work on-site on your behalf?
- Do you have access to property belonging to your clients or customers?
If the answer to any of the above questions is "yes," then you should consider protecting your business with general liability insurance. However, don’t assume that this coverage will take care of all your protection needs.
General Liability Insurance Limits
It is important to remember that liability insurance does not protect your own property, and it does not generally cover claims from your employees. It exists solely to protect your company from lawsuits.
For example, consider a scenario where an employee is performing cleaning services at a customer’s residence and accidently drops an expensive vase, moves furniture and causes scratches to the hardwood floor, or causes a slip and fall by not drying the floor thoroughly.
The damage to the vase/floor/injuries will be covered by your liability insurance. Because situations like these could happen to any business, it is a good idea to think about the potential risks you face during the workday and buy coverage accordingly.
Supplemental Insurance Products for Your Business
The business insurance products you require will vary depending on the type of business you run. For example, a home-based office for a graphic designer would have very different needs from a retail store with multiple employees and a stock room.
In many states, it is required by law to carry some form of workers' compensation insurance to cover injuries sustained by your employees.
There are many other types of coverage you may wish to buy, such as:
- Errors and omissions: If you are a consultant or another type of expert, this coverage protects you in the event that a client gets poor results after following your advice.
- Commercial auto: If your company uses delivery trucks or any other kind of company vehicle, a commercial auto policy is a must-have.
- Employment practices liability: This specialty coverage protects your company from suits arising from workplace hostility, discrimination, sexual harassment and similar employee conduct issues.
- Medical malpractice: If you are a doctor or you operate in any FDA-regulated field, malpractice insurance can offer protection against patient claims.
Many other products are available as well for particular industries and specific needs that general liability doesn't cover. For example, you may find that you require commercial excess liability insurance with higher limits than what a general liability policy offers. On the other hand, you may do just fine with a business owner's policy, which couples general liability with basic property protection.
The best way to know whether you have the right insurance protection is to discuss your needs with a qualified agent. An insurance expert from a well-established business insurance company, like Hiscox, can help you understand your needs and craft a policy that will protect your business without wasting money on unnecessary coverage. You can contact a representative or browse the Hiscox website to learn more about the policies right for you.