It is important for any business owner to have liability insurance; it is this coverage that will provide the business with assistance if its mistakes or negligence cause harm to a third party, like a customer. However, though very expansive, basic liability policies, known as commercial general liability (CGL) insurance, will not cover all liabilities present within your operation. Therefore, it’s important to be as aware of a CGL plan’s gaps as it is to know about its benefits. Let’s take a closer look.
The Basics of CGL Insurance
By buying a general liability insurance plan, you address the fact that you are able to take responsibility for problems that you might cause others who interact with your business. There is always a chance that you might negligently harm someone who interacts with your business (e.g., a customer). You will use general liability coverage under these circumstances to compensate those who sustained the loss. In other words, this form of insurance can offer protection against the resulting expenses if your business is held responsible for injuring a third party or damaging their property.
Most CGL plans include following forms of coverage:
• Bodily injury liability coverage—This coverage can compensate expenses stemming from injuries that a third party may face on your business’s property. Namely, it can cover medical costs related to such injuries.
• Property damage liability coverage—This coverage can reimburse costs related property damage that a third party may experience due to your business’s actions.
General liability insurance can also help protect your business against lawsuit costs related to third-party bodily injuries or property damage—such as defense costs, court fees and settlement expenses.
Other CGL benefits may also extend coverage to personal injuries (e.g., libel, slander and advertising injuries), or physical harm caused by your products or operations—depending on the specific features of your policy.
While these are essential, core benefits, they are not all-encompassing. Therefore, you might need to look elsewhere for more specialized liability benefits.
Expanding on Your General Liability Benefits
Opting to only buy a general liability insurance plan could put you in a tight bind; you might only have a limited set of circumstances during which you can make a claim. Therefore, you might need much more expansive coverage in order to get a higher level of protection.
Be sure to ask your insurance agent about extra liability coverage your business may need, such as:
• Professional liability coverage—Professional liability insurance covers claims regarding professional negligence. If your business or employees offer a specialized or professional service, you will need professional liability insurance. This may be required for you to receive certain professional licenses.
• Liquor liability coverage—Liquor liability insurance covers claims against the business concerning the selling or manufacturing of alcohol. If someone purchases alcohol from your business, becomes intoxicated and gets into a fight which causes injuries, for example, liquor liability insurance can protect you against a related lawsuit. This insurance is often required for businesses that plan on selling or manufacturing alcohol or to obtain a liquor license.
• Directors and officers liability (D&O) coverage—D&O insurance covers key employees of the business in case of a claim regarding their activities on a board of directors or as a representative of the business. This insurance can cover claims such as fraud, misrepresentation, mismanagement and more.
Ask your agent exactly how your standard CGL benefits can be expanded and augmented to create a more comprehensive level of protection. There are many types of hyper-specific liability coverage out there, and you can rely on your agent to guide you in the direction of the right ones.