Commercial General Liability Insurance: Explanation Of Commercial General Liability Insurance

Commercial general liability insurance, a.k.a. trip and fall insurance, covers your expenses if a customer sues you for personal injury or property damage. A small or medium-sized business or a startup company must, at the very least, have commercial general liability insurance to protect itself from the myriad of events that can happen when in business. Liability claims, whether fraudulent or not, can seriously damage, and even destroy, a company’s future.

If you have a small business or are just starting out, commercial general liability insurance can seem like a huge expense; however, a liability claim can be a massive, or even an impossible, price to pay. Even if a client only perceives wrong-doing on your part, your insurer will help you with the investigation and legal procedures and may even cover related expenses. In business, you are responsible for many situations:

  1. If a customer sustains an injury or his property is damaged while on your business’s property.
  2. If your product proves to be a health or safety hazard.
  3. If your operations are carried out in such a fashion that they result in a customer sustaining bodily injury or property damage.
  4. If you conduct your business in an illegal or irresponsible manner.
  5. If a client claims you have falsely advertised your product or service.
Commercial General Liability Insurance: Explanation Of Commercial General Liability Insurance

Commercial general liability insurance (CGL) can be a stand-alone policy or purchased as part of a business owner’s policy (BOP). Usually the coverage you will receive in a BOP has minimal coverage and omits a number of contingencies. If you want more thorough coverage, you are recommended to purchase a separate commercial general liability insurance policy. Most small businesses only need minimal coverage. However, as your company grows and changes, revisit your policy and decide if any additions, or even any removals, need to be effected.

It is commonly unknown that business owners, and even homeowners, can insist that a person have their own commercial general liability insurance before entering their property. Landlords can insist a tenant show proof of liability insurance before renting or leasing one of their properties. Homeowners can insist that a landscaper or handyman show proof of general liability before performing work in their yard or on their house.

Good business practices and regular property maintenance will go far in helping you and your business avoid a lawsuit, but for those occasions where something slips through the cracks, you can rest easy with commercial general liability insurance.

Commercial General Liability Insurance: Who Needs Commercial General Liability Insurance?

Commercial general liability insurance will protect you from the financial blow your business will take when a customer sues you for injury, damage or false advertising. Every venture should be insured but some types of businesses are more at risk than others; even some people and their positions in a company are more liable than others.

These are the types of businesses that should have commercial general liability insurance:

  • If your business allows the general public on to your property, or allows people to use your property, whether it is a retail store, a restaurant, or a rental agency, your risk of liability is high due to the high number of people that have access to your private property. If you rent your store or office, your landlord can insist you include him as an insured, as the safety of your customers lies with you, the tenant.
  • Construction contractors must be covered even before they can start working on a job or receive any kind of advance payment. Construction has a high risk of personal injury to anyone that may visit the job site. Also, construction specializes in demolition and reconstruction and a contractor can be sued for either due to a misunderstanding.
  • A company that offers homeowners services such as landscaping, gardening, snowplowing, handyman repairs or housecleaning, should be covered for liability in case a client sues for property damage or claims poor performance.
  • If your business guarantees loans and the loan suffers from non-payment, your commercial general liability insurance will cover the unpaid balance.
  • Companies that manufacture, repair or service products for clients should be covered for possible damages or injuries incurred on the job site or at your place of business.
  • Companies in the arts, such as book publishers, should be covered for potential copyright infringement claims.

These are the positions and people that should be covered by commercial general liability insurance:

  • Senior positions in a company are most susceptible to lawsuits and slander as they are primarily responsible for the operations of a company. People such as owners, CEOs, CIOs and CFOs, stockholders and subsidiaries, directors, partners and board members, as well as their spouses, should be well insured.
  • Employees, volunteers and vendors should also be protected from lawsuits.

Even the most honest businessperson can make a mistake; protect yourself against a lawsuit, even one that is due to basic human error.

Commercial General Liability Insurance: Who Needs Commercial General Liability Insurance?

Commercial General Liability Insurance: Who Needs Commercial General Liability Insurance?

Your commercial general liability (CGL) insurance rates are contingent on how risky your business is. Most small businesses and startups only need a minimal coverage. Your rates can vary from as low as $15 per year for selling homemade baby booties to as high as $100,000 per year for manufacturing military airplane parts.

A standard commercial general liability insurance policy includes lawsuit coverage for a client’s bodily injury or property damage, as well as your damages incurred by a client’s slander or false claims. The lowest rates for CGL coverage can be found in a business owner’s policy (BOP) where it is included with other coverage, such as property or casualty insurance.

A lot of factors are involved in calculating your commercial general liability insurance rate. There are a wide range of contingencies, and your rates will increase as you increase coverage.

  • Conditions with a high risk for serious bodily injury to clientele, such as a water skiing school, will have a higher insurance rate than a store that sells pillows and blankets.
  • The physical conditions surrounding your business. For example, a construction site has many more risks of injury than a retail clothing store.
  • The state in which you conduct business will affect your rate. Some states allow higher indemnities than other states.
  • If an alcohol-related accident occurs due to the alcohol served at a company party, you are covered if you did not sell the alcohol.

There are many items you can include in your policy to give you more thorough coverage.

  • Some insurers will offer coverage for the legal costs associated with a lawsuit, including investigation and defense costs, court costs, witness, attorney and police fees, as well as any costs you may incur if you are asked to participate in the investigation.
  • If you rent vehicles or equipment you can add a “hired auto and non-owned auto” option.
  • Extreme cases of slander can occur for which you can get coverage, as well as for such eventualities as false imprisonment, wrongful eviction, all business model infringements, and invasion of privacy.

Over the past few years the U.S. has experienced serious business perils, including terrorism and the stock exchange plummet. During this time, commercial general liability insurance rates have increased. Therefore, it is important for you to do your research to find a policy that fits your business and your budget.

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