If you own or run a business, then you know that you need insurance. Every business has specific risks that they need protection from, and insurance is one of the best ways to do that. In fact, some types of insurance are mandatory, such as workers’ compensation insurance.
Before you look at any other type of insurance, start with general liability insurance. It is the basis for business insurance, and it is the most essential type of insurance to have. Here is a deeper look at what general liability insurance covers and why your company needs it more than any other type of insurance.
What is Covered by General Liability Insurance?
General liability insurance covers your business for the most basic and universal of risks. In the event that you are held liable for property damage or bodily injury as a result of your business activities, it helps cover the costs. It also helps you recover costs if your business is sued for negligence, defamation, or personal injury.
Three Parts of GL Insurance
General liability insurance typically covers four main areas:
- Damage to other people’s property
- Injuries to customers or non-employees in any area where your business operates
- Liability related to your products or services
- Administrative, legal, and court costs
Each of these four parts (three risks and the costs of resolving issues related to them) are common for all businesses. Because of this, general liability insurance is essential but also limited in its coverage. You should start here, but you will also need other types of insurance for coverage in more specific circumstances.
Product Liability
If any of the products you sell are defective and cause physical damage to another person, then you could be held responsible and required to compensate them for the damages. Product liability insurance helps protect your business in the event you are sued by a customer after they have been injured by your products. The policy will help cover your legal costs and any damages awarded to the customer.
Property Damage to Other People’s Property
Property damage insurance is a part of general liability insurance that covers you if you damage someone else’s property. For example, if you accidentally flood a customer’s home because of a faulty rain gutter or burst water pipe, the property damage insurance would cover the cost of the repair or replacement.
Property damage insurance is usually a broad form property policy. It covers damage to other people’s property caused by you or your employees. The policy will pay for repairs to the damaged property and any related legal costs. It also covers you if someone sues you for the damage.
Personal Injury
Personal injury insurance covers the cost of medical treatment for employees who are hurt on the job, as well as any damages awarded by a court if someone sues your business for wrongful injury.
Personal injury coverage only applies to injuries of non-employees related to the work that your company does. For example, it does not apply to workers injured on the job. They are covered by workers’ compensation insurance, which is not a part of general liability insurance.
Administrative Costs for Claims
For every type of coverage that you have, there is a component that covers the administrative, legal, and court costs of handling claims. Whether your business is held liable or not, it still has to defend itself in legal processes that can be expensive. Because of this, the administrative costs are covered up to a specific amount per incident so that your company does not risk losing a lot of money just to defend itself.
Likewise, court costs coverage pays for the cost of defending a claim in court if a lawsuit is filed against you. Court costs coverage is typically $10,000 per claim but can vary based on the plan and the provider that you choose.
Why Your Company Needs General Liability Insurance First
General liability insurance is seen as the basis for all other forms of business insurance. When a company starts to assemble its insurance coverage packages, the first one should always be a general liability policy. This is because it provides the most coverage in terms of the risk your company faces.
Every company risks being sued at any time by anyone, regardless of if the company is guilty or not. Having a good general liability insurance policy helps protect you from losing assets when your company is sued.
More importantly, your company needs general liability insurance first. This is because it covers the things that you are most likely to be sued for. Beyond that, other types of insurance coverage apply to specific, narrow situations, and few cover the same options as general liability. The ones that do have stronger restrictions since they have larger payouts.
In essence, every other type of insurance is treated like an add-on to general liability since GL insurance can help you in other cases, but those other types of insurance only cover their specific areas with no overlap.
Review Your General Liability Insurance Options
General liability insurance covers a range of business activities and potential hazards. It’s important to understand what your policy covers and how much it will pay in the event of a claim. When you are setting up a new business, you should make sure you have the right amount of coverage for your business.
If you are just starting your business, then it is important to get a general liability policy as soon as possible. You can be sued from day one, and not having a policy in place means you are vulnerable.
If you already have a policy in place, make sure that you review your options regularly. Your needs may change, and many companies find themselves in trouble when they forget to upgrade their GL policy as the company grows.
Millers Insurance Group provides a variety of cannabis insurance options. Please reach out to us or fill out our online form to get an insurance quote today for your company’s insurance needs.
