Protecting Your Business: The Role of General Liability Insurance
General liability insurance is an essential form of insurance coverage for any organization, large or small. It covers claims for bodily harm, property damage, and personal injury resulting from a business’s operations.
This means that if someone is injured on a business’s premises or if a business’s operations cause damage to someone else’s property, general liability insurance can help to protect the business from potentially costly lawsuits and legal claims.
A recent market research report by AMR reveals that the global general liability insurance market had a valuation of over $25 billion in 2021. The report projects a significant growth trajectory for the market, with an expected valuation of $433 billion by 2031.
Without general liability insurance, businesses may be exposed to significant financial risks, which can be particularly devastating for small businesses. In this article, we will discuss the importance of general liability insurance for businesses, what it covers, who needs it, how much it costs, and how to purchase it.
What is General Liability Insurance?
General liability insurance is a form of coverage that safeguards against physical injury, destruction of property, and personal injury claims that come from the activities of a business.
This type of insurance is designed to protect businesses from lawsuits and other legal claims that could arise as a result of accidents, injuries, or damages caused by the business or its employees. General liability insurance can provide coverage for a range of risks and can be tailored to suit the needs of individual businesses.
What Does General Liability Insurance Cover?
Claims for property damage, personal harm, and physical injury are often covered by general liability insurance. This can include medical expenses, lost wages, and other damages that may arise as a result of an accident or injury caused by the business or its employees.
For example, if a consumer slips and falls in a store, general liability insurance can cover any medical bills or legal fees that occur. Likewise, if a contractor causes damage to a client’s property while conducting work, general liability insurance might cover the cost of repairs.
General liability insurance can also cover legal costs and other expenses involved with fighting against a lawsuit or legal claim. These might include legal fees, court costs, and settlement payouts.
Slips and falls are the biggest cause of emergency department visits, according to a 2022 article in The Hartford. This type of claim typically costs $35,000 to file. If a claim leads to a lawsuit, the average cost of defending and settling the claim might exceed $75,000.
General liability insurance can be an important source of protection for businesses that face potential legal claims, as it can help to mitigate the financial risks associated with litigation.
Who Needs General Liability Insurance?
General liability insurance is required for any business that deals with the public or functions in a domain. This can include businesses such as restaurants, retail stores, contractors, and manufacturers.
Additionally, businesses that provide services or advice, such as consultants or professional services firms, may also benefit from having general liability insurance. Businesses that do not have general liability insurance may be exposed to potentially costly legal claims and lawsuits.
For example, if a customer is injured on a business’s premises and the business does not have insurance, it may be required to pay for medical expenses and other damages out of pocket. This can be financially devastating for small businesses and can even threaten their continued operation.
How Much Does General Liability Insurance Cost?
Many variables, including the kind and size of the firm, the sector, and the degree of risk involved, might affect the price of general liability insurance. General liability insurance typically costs $500 to $2,000 per year for small firms, but it might cost several thousand dollars or more for bigger companies.
A January 2023 article by Forbes suggests that business owners can manage the costs of general liability insurance by choosing appropriate insurance limits for their specific needs. Insurance limits refer to the maximum amount of coverage provided by the policy.
The level of coverage necessary, the deductible amount, and the business’s claims record are all factors that might impact the cost of general liability insurance. Businesses with a history of making insurance claims may be required to pay higher premiums, as they are considered higher risk.
How to Purchase General Liability Insurance?
General liability insurance can be purchased from insurance companies or brokers that specialize in commercial insurance. Before purchasing a policy, businesses should carefully consider their coverage needs and work with a knowledgeable insurance agent to determine the appropriate level of coverage.
When purchasing general liability insurance, businesses should also pay close attention to the policy terms and conditions. For example, some policies may have exclusions or limitations on coverage, and it is important for businesses to understand these before signing a policy.
Ultimately, general liability insurance is an important investment for companies of all sizes and sectors. It provides protection against potentially costly legal claims and lawsuits arising from accidents, injuries, and damages caused by the business or its employees.
Without this insurance, businesses may face financial risks that could threaten their operations and future success. While the cost of general liability insurance can vary depending on various factors, its benefits far outweigh the expense.