It is probably fair to say that some business owners are not even aware that their company needs the sort of protection provided by general liability insurance and there can sometimes be some confusion or misconceptions relating to what is and what coverage it provides.
Here is an overview of what general liability insurance is all about, including a look at whether you need it and what sort of coverage would be right for your business.
Protecting your assets and more
In general terms, general liability insurance is designed to protect your company’s assets and provide a safety net when you are forced to pay for certain obligation and liabilities that would otherwise leave you financially exposed, such as some medical costs.
You can get a tailor-made cover that is specific to your type of business such as general liability insurance for contractors with a view to paying for the sort of cover that is relevant to your needs, although certain aspects of coverage will probably be similar across a range of policies available.
An example of how general liability insurance can protect your business would be a scenario where someone suffers an injury on your premises and files a claim for damages against your business.
Having the right liability insurance in place should cover the cost of your legal defense together with the settlement of an award made against you if the claim is successful.
Without having that peace of mind and level of protection from general liability insurance your business and assets could be exposed and financial losses could even put your ability to continue trading in jeopardy.
Difficult to predict
You might decide that the nature of your business or the level of diligence you apply to any work that you do should ensure that you are highly unlikely to face any sort of claim and therefore, don’t need any liability insurance.
It may well be the case that you trade for years without suffering any sort of financial loss or claim that could have been covered by insurance coverage but if a situation arises and you are left financially exposed, it could be a chastening monetary lesson that could have been avoided.
It is that element of uncertainty that may well tip the balance in favor of either arranging general liability insurance outright or adding it as a key element of your business owner’s policy.
If you do decide to add coverage to an existing policy make sure you check whether the terms and level of cover are adequate for your needs.
Know your limits
Every insurance policy you take out will contain details of the maximum amount the insurance company is prepared to pay out in respect of a liability claim.
It is essential that you understand and acknowledge these limitations as you may need to increase the payout amount if the standard figure is insufficient, although the insurer will want a higher premium and might not be prepared to increase their risk exposure.
How these limits work is fairly straightforward. If your business gets sued and is ordered to pay $500,000, for example, and your coverage is a maximum of $250,000, that means you are on the hook personally for the difference.
The case for contractors
Although there is a reasonable argument for most types of business to have the protection of general liability insurance behind them there are definitely certain industries and sectors that are potentially more prone to claims.
Construction is a case in point. It is a rightly perceived as a high-risk industry where there are numerous opportunities for an injury to occur where a claim might follow as a result of the incident.
If you are a contractor you should consider protecting your business against third-party injuries while you are working on someone’s premises or at their home and getting coverage so that you have protection against a claim made for damage to property too.
It would be wise to be aware of the threat of litigation and financial loss and one way of reducing that risk would be to arrange general liability insurance. Will the right coverage you should be able to go about your business in the knowledge that you have a financial backup plan if something goes wrong.
Seek out a professional opinion and quote for your business so that you can get the most appropriate coverage for your business and enjoy greater peace of mind once you have got general liability insurance.