General liability insurance

General Liability Insurance (GL)

What is General Liability Insurance for business?

General liability insurance is a form of business insurance designed to protect your company from lawsuits and other third-party claims that may arise in three key areas: bodily injury, property damage, and advertising.

Regardless of your business type—whether it’s IT, construction, manufacturing, offices, multiplexes, hotels, or another industry—general liability insurance protects your business from legal liability and provides coverage by compensating for damages or injuries to third parties.

General liability insurance is sometimes called business liability, commercial general liability, or simply GL for short.

The most common way for small businesses to get general liability insurance is through a business owner’s policy (BOP). A BOP combines general liability insurance with product liability insurance and includes several additional coverages typically needed by business owners.
General liability protects against injuries or property damage to third parties while they are on your premises.
Product liability covers damage to third-party property, injuries, or death resulting from the use of your product.

Why might general liability insurance be necessary for your business?

Businesses never plan for accidents or injuries to happen. But accidents do occur, and the consequences can have a significant impact on your business in the form of damages and lawsuits. The more severe someone’s injuries or the more people are affected by a simple accident, the higher the potential compensation for those injuries. General liability insurance is designed to cover legal fees, court costs, and settlements if you lose a lawsuit.

What does General Liability Insurance (GL) cover?

Here are some common risks and claims business owners may face:

1. Premises Liability

If you own a space such as an office, salon, or retail store, and someone enters your premises, slips, or trips and falls, sustaining an injury, they may sue you for their injuries, pain, and suffering. This can be costly. It’s important to note that a feature of general liability policies called “medical payments” may cover the injured party’s medical bills but not their pain and suffering claims.

2. Operational Liability

For example, a contractor may drop a hammer on a construction site and injure another subcontractor. This is an example of the operational part of liability insurance, which covers medical bills for pain and suffering, as well as legal expenses related to settling such claims.

3. Product and Completed Operations Liability

Whether you manufacture a product or simply sell it, there is a risk that your product could harm or injure a user. Product liability claims can arise from defective products causing harm, or materials causing injuries to someone. These types of claims are also covered by general liability insurance. When a contractor finishes work, the completed work may cause damage.
A simple example: A window is not properly secured to the structure and falls out after the work is completed, injuring a pedestrian on the sidewalk. This is a form of completed operations liability also covered under the general liability (GL) policy.

4. Advertising Liability

This is the most confusing part of business liability. Since it’s not related to bodily injury or property damage, it involves claims related to defamation, false arrest, copyright infringement, using another person’s advertising ideas, or invasion of privacy. Any unintentional harm caused by advertising.

For example: If I create an advertisement for my company and accidentally use someone else’s logo, product, or content without obtaining the necessary permissions, copyright issues may arise. Or, if you write something about another company and it damages their reputation due to negligence.

What does General Liability (GL) Insurance not cover?

1. Personal Auto Liability — You can include rented and non-owned vehicles under a business liability policy. However, personally owned vehicles are excluded from general liability coverage.

2. Employer Liability — This falls under workers’ compensation insurance and is not covered by a GL policy.

3. Employment Practices Liability — This policy covers claims related to wrongful employment practices, such as harassment, discrimination, wrongful termination, and such claims are excluded from GL insurance.

4. Bodily injury or property damage you intend to cause or expect to happen.

5. Environmental Pollution — Claims related to environmental pollution are excluded from general liability (GL) policies.

6. Product Recalls — This is an important issue for manufacturers and distributors. If your product causes harm or damage to a third party, such as a customer, those claims will be covered. However, subsequent claims or costs related to recalling a potentially dangerous product from the market are not covered under a general liability policy. For example, costs associated with logistics and product disposal.
A separate product recall policy is required.

What is Excess Liability Insurance for business?

General liability insurance has its limits: you typically purchase limits of $1 million or $2 million per occurrence, which may not be enough in the case of a major claim. There is an aggregate limit and a per-occurrence limit.

Therefore, it’s important to consider purchasing excess liability coverage in addition to general liability insurance.

Excess policies provide coverage beyond your general liability and other liability policies. These include:
1. Commercial Property Insurance, which covers first-party damages.
If something happens to a third party due to your negligence, the damage is covered by general liability insurance. If something happens to your building or personal property, commercial property insurance will cover the damage.

2. Operational Coverage
3. Product Insurance
4. Completed Operations Coverage
5. Personal and Advertising Injury Insurance
6. Medical Expenses Coverage
7. Damage to Rented Premises

and other coverages designed to protect the firm from certain hazards or claims, which are generally not covered under a general liability policy.
Different risks and the specifics of your business require a tailored, comprehensive approach.