Understanding General Liability Insurance

Your business is rockin’ and rollin’ and you’re on your way to living out your entrepreneurial dreams. Nice!

But wait . . . what’s this whole business insurance thing? You’re starting to wonder what kind of coverage you need—or if what you have currently is enough. Because the last thing you want is for something catastrophic to knock you out of the game.

Never fear. We’ll walk you through everything you need to know about general liability insurance so you can get coverage that protects everything you’ve built.

What Is General Liability Insurance? 

General liability business insurance (also called commercial liability insurance) is coverage that protects your business from things like property damage, legal and medical expenses, and bodily injury. General liability protects you in a general way (makes sense). Think of it as an umbrella that covers your business from a bunch of bad things that could happen (not to be confused with umbrella insurance, which is different.)

Just like other insurances, like homeowners and auto, general liability insurance covers a wide variety of situations. Like if a customer slips on water, falls and breaks their ankle while inside your store, general liability would cover the legal fees and medical costs if they sue you.

And while general liability is not one of the eight types of insurance that everyone needs, it is crucial if you own your own business.

Why Do I Need General Liability Insurance? 

Running your own business is, well, risky business. A lot can go wrong—no matter how big your business is. Even small-business owners take on a lot of risk with rent, inventory, hiring employees and other aspects of operating a business.

Think of general liability insurance as a strong defense. Football teams don’t spend all their time just building up their offense. They also build a rock-solid defense to prevent the other guys from scoring.

Businesses are the same. Savvy business owners like you know you need to focus on good offense and defense. Insurance is part of that defensive strategy. Business liability insurance will protect you from all the unexpected things that could set you back or even take you out of business. And in our modern world, it seems people sue for all kinds of random reasons—even if they’re not legitimate. All it takes is one lawsuit to do serious harm to what you’ve built.

It’s also important to get the right amount of coverage. An insurance agent can help you assess how much you need so you’re not exposed.

What Does General Liability Insurance Cover? 

General liability business insurance covers property damage, protection against legal fees and medical costs, and bodily injuries that come from your business, your products or services. In some cases, if you’re renting space for your business, it also could help protect you if you’re held responsible for damages to your landlord’s building or property.

However, general liability insurance doesn’t cover everything. Here are a few things it won’t cover:

• An employee getting injured at work (worker’s compensation)
• Poor workmanship (like a contractor who repairs a leaking roof and it still leaks)
• Professional mistakes and intentional acts
• Auto-related accidents

Depending on your industry and specific business, you can also get endorsements for extra coverage. Some of these add-ons include things like liquor liability, which protects you from injury claims related to selling or serving alcohol. Check with your insurance agent about what extras you might need.

How Much Does General Liability Insurance Cost? 

If you’re worried about how much general liability insurance costs, let’s dig into the numbers. General liability business insurance ranges from a few hundred dollars a year to more than $1,000. It all depends on the size of the business, your location and history, the industry, and the needs of the company.

Protect your business and your budget with the right coverage!

Customer-facing industries, like retailers, carry greater risk, so their insurance costs more. Basically, the higher-risk industry you’re in, the higher premium you’ll pay. So industries like construction or landscaping have higher rates because they’re working on other people’s property.

Another thing that will impact your premium is the amount of liability you choose. The higher the limit, the more you’ll pay. Most small businesses have a $1 million limit to what the insurance company will pay per claim. This will also include a $2 million aggregate limit—this means your insurer will pay no more than $2 million total during the life of the policy. Most policies are usually for one year.

Bottom line? If you think you’ll need more coverage, it’ll end up costing you more.

How to Save Money on General Liability

Here are three ways to save on your general liability insurance:

1. Pay the full year in advance.

This is the case with most insurance policies. Paying for the whole year up front will save you money as opposed to paying in monthly installments.

2. An ounce of prevention is worth a pound of cure.

By being proactive and creating a plan to manage your risk, you could prevent certain incidents from happening in the first place. And that’s what you want because, just like auto or home insurance, the fewer claims you have, the less you’ll pay. Consider doing things like installing a security system on your property or creating safety training programs for your workers.

3. Bundle and save.

We’ve heard it a million times in TV ads. But it’s true. Bundling different policies from the same insurance company will often save you some cash.

How Do I Get General Liability Insurance? 

You can shop for policies on your own. But when it comes to general liability insurance for your business, the best way to get covered is to work with an insurance agent. This is because figuring out the right coverage for your business can be hard. And it’s super important to get it right.

That’s why we recommend working with one of our insurance agents who is part of our Endorsed Local Providers (ELP) program. They’re RamseyTrusted and can help you pinpoint exactly what you need for your specific business and industry.

Connect with an ELP today to get set up with general liability insurance for your business.