General Liability Insurance Quotes For Small Business
Small Business Insurance buyers often purchase a Business Owners Policy (BOP) which is a package policy that includes General Liability Insurance and Property Insurance. Packaging the two policies together results in broader insurance coverages at a discounted price.
General Liability insurance may be referred to in lease agreements and other contracts as a Comprehensive General Liability Insurance, Commercial General Liability Insurance, Business General Liability Insurance, or as Public Liability Insurance. These terms are interchangeable;however, the most modern term is Commercial General Liability Insurance.
General Liability insurance responds to covered lawsuits alleging that the negligence of the small business owner has resulted in injury and/or damages to a third party. Covered injuries and damages include bodily injury, property damage, personal injury, and advertising injury. The policy will pay up to the policy limit in the event that the lawsuit is settled or if the small business owner loses a jury trial. Of equal importance is that the policy pays for the legal defense costs. Legal defense costs such as attorney's fees, investigation, etc. can be extremely expensive even if the the small business owner prevails in the lawsuit.
Common Examples Of General Liability Incidents That May Be Covered:
- Premises liability insurance claim where a customer trips and falls due to uneven stairs resulting in a broken leg.
- Property damage liability claim where an employee plugs in multiple appliances to an extension cord resulting in an electrical short and a resulting fire which destroys the landlord's building.
- Product liability insurance claim where a retail store sells a toy with small removable parts resulting in the choking death of a small child.
- Operations claim that occurs off premises where an appliance repair shop installs faulty wiring resulting in fire damage to a customer's home.
Contracts Must Be Carefully Analyzed:
Small businesses often enter into contracts with other third parties such as for real estate leases, equipment leases, job bids, shipping contracts, etc. These contracts often impose minimum insurance requirements pertaining to General Liability insurance. These older boilerplate contract typically require Public Liability Insurance including premises liability, completed operations, and product liability. These terms are automatically incorporated into the modern General Liability policy form. In addition, these contracts frequently require that a minimum limit of at least $1,000,000 combined single limits be carried with a carrier that is rated A by AM Best and that the other party be named as Additional Insured. These requirements must be closely scrutinized and negotiated to avoid a breach of contract problem.
The Important Commercial General Liability Coverage Parts And Typical Policy Limits:
- Each Occurrence Limit: $1,000,000-- The Each Occurrence Limit is the amount that the policy will pay for any one covered lawsuit. Additional limits of coverage can be obtained by purchasing an Umbrella or Excess Liability policy.
- General Aggregate Limit: $2,000,000-- The General Aggregate Limit is a cap that the policy will pay for multiple premises liability and operations liability lawsuits that occur within a 12 month policy period. For example, if your Each Occurrence Limit is $1,000,000 and your General Aggregate Limit is $2,000,000, the policy will pay for two $1,000,000 lawsuits or four $500,000 lawsuits that occur within the same policy period. The General Aggregate Applies to premises liability and operations liability types of lawsuits that arise out of a hazard in your premises (ex: slip and fall resulting from wet spot) or a dangerous condition in your operations that results in injury to a third party.
- Products / Completed Operations Aggregate Limit: $2,000,000-- This is a special aggregate limit that applies to the product liability types of lawsuits that occur after the product or service has been sold. For example, a distributor sells a piece of sporting goods equipment that is defective and results in injury to a baseball player. Product liability is a critical coverage component.
- Personal / Advertising Injury Limit: $1,000,000-- Typical Personal Injury offenses that may be covered include certain types of slander, libel, false imprisonment, and invasion of property. Advertising Injury occurs when your business unintentionally disparages or makes a misstatement about a competitor in your advertising materials. In addition, certain types of intellectual property violations may be covered on a very limited basis.
- Damage To Premises Rented To You: $300,000-- This coverage is also known as Fire Damage Legal Liability. The need for this coverage arises when your business rents or leases premises from a landlord and when your negligence results in damages to the portion of the building that you rent or lease. For example, a tenant may improperly use an extension cord to power multiple electrical appliances resulting in an electrical short that starts a fire which damages the building.
- Premises Medical Payments: $10,000-- Normally, a General Liability policy does not respond to an injury until there is a threat of a lawsuit as evidenced by a letter from an attorney or the filing of lawsuit papers. However, Premise Medical Payments Coverage allows the claims adjustor to make payment for minor medical bills and other damages up to $10,000 without the threat of a lawsuit. The purpose of this coverage is to "appease" the injured party so that they never hire an attorney in the first place. Once an attorney is hired, the bills and legal defense costs may expand exponentially. In the event that damages do exceed $10,000, the Each Occurrence Limit of $1,000,000 would still apply to satisfy any covered demands.
What Types Of Lawsuits Are Not Covered By Comprehensive General Liability:
The following types of lawsuits are typically excluded (not covered) by a General Liability policy:
- Employment Practices Violations-- Wrongful termination, discrimination, and sexual harassment.
- Cyber Liability-- Damages to third parties resulting from your use of email and websites.
- Liquor Liability arising from the sale of alcoholic beverages for a charge.
- Professional Liability-- Economic damages arising out of errors and omissions in the providing of professional services.
- Employee Benefit Errors & Omissions-- Damages to employees arising out of your errors or omissions in administering your employee benefit plans such as Group Health Insurance.
- Directors & Officers Liability-- Injuries or offenses to stakeholders such as shareholders, creditors, employees, or competitors arising out of your managerial negligence that results in economic damages or violates state, federal, or constitutional rights.
- Pollution Liability-- Damages to third parties resulting from your negligence in allowing the escape of pollutants from your premises or operations.
- Media Liability--Damages arising out of your media activities (advertising or publishing) for others for a fee.
- Foreign Liability-- Damages resulting from lawsuits filed in foreign jurisdictions (outside of US or Canada) arising from your foreign operations or foreign sales of products or services.
Some of these coverages can be added back to your Business General Liability policy by endorsement for an additional charge. Others may require that a stand alone policy be purchased from a specialty insurance market. If you are interested in any of these additional liability coverages, you should notify your insurance agent in writing.
What Determines The Cost Of Your Policy:
The cost of a General Liability policy is determined by the type of business to be insured. The most common premium or rating factors are payroll, sales, square foot area, number of units, etc. The logic is that the greater the number of exposure units, the greater the chance of a lawsuit and as a result a higher premium should be charged. Contractors and service providers are typically rated based on payroll. Manufacturers, retailers, and wholesalers with product liability insurance exposures are typically rated based upon sales. Building owners that lease premises are typically rated based upon square foot area to coincide with their premises liability insurance exposures.. More recently, some carriers have begun to rate for General Liability insurance based upon the value of the Property exposures to be insured.