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Small Business General Liability Insurance Policy Information

Small Business General Liability Insurance

Small Business General Liability Insurance. General liability insurance protects your business against property damage, advertising injury claims, personal injury claims, and bodily injury claims. Such claims could jeopardize the success and reputation of your business.

As a business owner or contractor, you require a form of general liability coverage, to shield you from such unexpected situations. A single accident might lead into a lawsuit that is beyond your financial abilities. When that happens, you will be staring at losing your source of livelihood. That is where a general liability insurance policy comes in.

Small business general liability insurance policy coverage pays for cost of third-party lawsuits over slip-and-fall injuries, property damage and more. Get a fast and affordable quote today.

Below are some answers to commonly asked business general liability insurance questions:


How Much Does Small Business General Liability Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 Small Business General Liability Insurance policy ranges from $27 to $59 per month based on location, services offered, payroll, sales and experience.

The cost of your small business general liability insurance coverage is determined by various factors. They include the business type, location of your business, the total number of employees in your business, as well as the risk level your business is exposed to.

For example a roofer working on a roof faces much higher risks than an accountant sitting in an office behind a desk.


In our litigious society, more and more businesses are being sued due to issues like libel, slander, property damage, and bodily injury, just to name a few.

Apart from that, businesses can be sued even when they have not done anything wrong. That is why your business requires general liability insurance coverage. You can get a CGL policy quote online fairly easily... for most business types.

What Does Small Business General Liability Insurance Cover?

A commercial general liability policy provides the insured with protection against legal liability for which the law provides money damages as a possible remedy. This liability may arise out of actions of the insured or the insured's employees, or the actions of others, for which the liability for which is assumed by the insured through contracts.

Commercial general liability insurance coverage is often called "third party" coverage, because the insurance policy is a contract between the insured and insurer (first and second parties) to pay for loss to a third party (insureds customer, client, patron etc.) caused by the insured's tortous acts.

General liability insurance pays for the bodily injury or property damage losses the policyholder may cause to others (3rd party) up to the policy's coverage limit. This insurance typically covers any legal expenses and court costs needed to defend the claim. Some of these liabilities arise from:

  • the ownership and maintenance of premises
  • the conduct of a business or operation
  • the manufacture, distribution or selling of a product
  • completed operations
  • work done by independent contractors or subcontractors
  • liabilities assumed by contract

The insurance company pays amounts the insured is legally obligated to pay as damages due to bodily injury or property damage that the insurance policy covers. It also has the right and duty to defend the insured against lawsuits that seek those damages. At its option, the insurance company can investigate any claim and settle any lawsuit that may result.

Businesses are inherently risky. The good news is that some of the risks can be protected. Small business general liability insurance helps to safeguard your company against various known and unknown risks.

Some of the areas in your business that are covered by small business general liability insurance include:

  • Property damage and bodily injury: The property damage and bodily injury helps to protect your business against various business claims as well as claims alleging financial loss as a result of bodily injury or property damage, occurring out of your products or business operations. Slip an fall is covered here.
  • Advertising errors: This protects your business from certain claims where others claim that your business has infringed on certain copyrights when advertising your goods, services or products.
  • Reputational harm: The reputational harm protects your business against claims of malicious prosecution, false arrest, slander, libel, wrongful eviction and violation of privacy rights, just to name a few.
  • Damage to rented premises: This helps to protect your company from certain claims that might occur during your business operations. This may be occasioned by lightning, fire or explosion.
  • Medical payments: Small business general liability insurance will protect your business against medical claims brought forward, when someone gets injured in your business premises and requires medical treatment.


Some clients might also need you to agree to a certain level of general liability before you can provide goods or services to them. With general liability insurance, such issues are adequately handled.

What Doesn't Small Business General Liability Cover?

Every insurance coverage form or policy has certain exclusions and limitations. This is because only specific types of businesses need the coverage or the risk or exposure to loss is not considered insurable for some reason. Some bodily injury and property damage liability exclusions are:

  • Aircraft, Auto, or Watercraft
  • Damage to Property
  • Distribution of Material in Violation of Statutes
  • Expected or Intended Injury
  • Liquor Liability
  • Mobile Equipment
  • Pollution
  • Recall of Products, Work, or Impaired Property
  • War
  • Workers Compensation


What Are Common General Liability Insurance Coverage Gaps?

 Commercial General Liability Insurance Coverage Gaps
No Coverage For Joint Ventures

The standard general liability policy does not provide liability coverage for any person or organization with respect to any unnamed joint venture. Only joint ventures that are listed in the policy declarations as named insureds have insured status.

No newly acquired or formed joint ventures are covered unless the insurer agrees to provide coverage and the entities are listed on the policy.

Not Providing Additional Insured Status

A potential gap in coverage exists when a named insured agrees to make some other party an additional insured, but the other party is never added as such to the named insured's policy.

This situation not only creates a lack of coverage for the additional insured but also exposes the named insured to a breach of contract situation since it is contractually obligated to provide the coverage to the other party.

This is true because many business contracts often require one of the contracting parties to make the other party an insured under one or more of the first party's insurance policies.

No Coverage For Newly Acquired Companies

Newly acquired organizations have limited coverage under the standard commercial general liability policy:

  • Some types of newly acquired organizations are not automatically covered. Newly acquired partnerships, joint ventures, and limited liability companies (LLCs) are not covered at all unless they are listed on the policy with the insurer's permission.
  • The standard CGL covers new entities only if the named insured owns them or has a majority interest in them.
  • Automatic coverage applies for a limited time period. There is always the danger that a new entity's coverage will expire if the insurer is not notified within the required time frame. If a claim or suit is filed against the new company before the oversight is recognized, the insured may incur an uncovered loss.


Improperly Relying On Fire Legal Liability Coverage

This involves coverage for damage to premises rented by an insured. The general liability policy includes a benefit traditionally referred to as fire legal liability "coverage." Subject to a sublimit of $100,000, which may be increased, this benefit protects a tenant against liability arising out of fire damage to rented premises.

Coverage gaps may occur when policyholders attempt to use this liability coverage as a substitute for property insurance. Gaps may also occur if the insured has contractually agreed to be liable for rented premises.

No "Loss of Electronic Data" Coverage

Many businesses might find that they have inadvertently damaged another party's electronic data.

They might also be surprised to discover that the standard commercial general liability policy does not cover damage to electronic data unless an endorsement has been added.


'Real Life' Court Cases Involving General Liability Policies:

Insurance Legal Cases
Pennsylvania Turnpike Commission, Plaintiff V. The Transcontinental Insurance Company Et Al

An automobile driven on the Pennsylvania Turnpike was allegedly struck by an unidentified car and catapulted through a barricade at an underpass construction site. One workman at the site was killed and another seriously injured. They were employees of an industrial painting firm which was hired under a subcontract to paint three bridges on the turnpike. The widow of the deceased worker and the injured man sued the Pennsylvania Turnpike Commission, among others, alleging that the safety plan for night work was negligently designed and maintained by PTC.

PTC had been named an additional insured under the painting firm's general liability insurance, pursuant to the subcontract. The insurer eventually undertook defense but denied indemnification for any settlement or judgment that might be made.

PTC brought a declaratory action seeking clarification of the coverage with respect to the lawsuits brought against it; both parties filed cross-motions for summary judgment. Each paid half of a negotiated settlement amount and agreed that the successful party would be reimbursed by the other when the coverage questions were resolved.

The insurer acknowledged that the turnpike commission was an additional insured under the policy with respect to negligence on the part of the named insured, but not for its own "independent acts" of negligence.

An additional insured endorsement amended the policy definition of "insured" to include "....the person or organization shown in the Schedule, but only with respect to liability arising out of 'your work' for that insured by or for you." PTC argued that "arising out of" extended the coverage to liability that was created by the subcontractor's contractual obligations. It said that the injuries were clearly associated with contractual obligations of the named insured to perform its work. court determined that the pertinent language was sufficiently broad to cover not only claims directly resulting from the named insured's work but also "causally related incidents." This embraced the claims alleging "independent negligence" on PTC's part that would not have developed except for the contract and the painting firm's work.

The plaintiff PTC's motion for summary judgment was granted; that of the insurer was denied.

(Pennsylvania Turnpike Commission, Plaintiff V. The Transcontinental Insurance Company Et Al., Defendants. United States District Court for the Eastern District of Pennsylvania. No. 94-5939. August 7, 1995. CCH 1995 Fire and Casualty Cases, Paragraph 5409.)

The Travelers Insurance Company, Appellant V. Aetna Life And Casualty Company, Appellee
General Liability Insurance Claims

This case proves helpful in defining "loading or unloading" and in determining how automobile liability insurance and general liability insurance respond, respectively, to claims arising from such commercial operations.

A business engaged in the transportation of elderly and handicapped people by vans equipped for the purpose carried its automobile liability insurance in one major insurer and its general liability insurance in another. The estate of an elderly lady sued the insured for damages resulting from injuries suffered by the lady and her subsequent death. Two employees had strapped her in her wheelchair in her upstairs bedroom and carried her downstairs to the front porch of her residence, toward a parked van for transportation to an adult day-care center. One of the employees lost his footing on the porch, and the wheelchair tumbled down the porch steps to the pavement below with the woman in it.

Each insurer filed a motion for summary judgment in its favor, the issue being the application of the two policies in the circumstances. The automobile policy, under liability coverage, defined a covered "accident" to include "....the loading or unloading of an auto." The general liability policy contained an exclusion for "loading or unloading of....any automobile...." Appeal followed the trial court's granting of the motion by the general liability insurer and denying that of the automobile liability carrier "on the ground that the accident arose out of the 'loading' of the van."

The appeal court cited three prior Massachusetts cases in which it formulated its position on the issue at hand. It stated that it "has adopted the 'complete operation' rule and rejected the narrower 'coming to rest' doctrine in construing such 'loading and unloading' clauses in automobile liability insurance policies." It said that it defined the operation of unloading as "a continuous transaction ending with the deposit of the goods in the hands of the purchaser." It was concluded that the attendants were "in the process" of loading the lady into the van.

The order of the trial court was affirmed that denied the motion of the automobile liability insurer for declaratory relief and that allowed the motion of the general liability insurer for summary judgment. The appeal court said that, whereas the "loading and unloading" language was similar in both policies, it must be interpreted in the same manner in the general liability policy, where it was an exclusion.

(The Travelers Insurance Company, Appellant V. Aetna Life And Casualty Company, Appellee. Massachusetts Supreme Judicial Court, Middlesex. June 4, 1991. 410 Mass. 1002, 571 N.E.2d 1383. CCH 1991-92 Fire and Casualty Cases, Paragraph 3392.)

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Small Business Insurance By Industry And/Or Type

Select the general industry or small business insurance type link below to find more detailed information on coverage, costs, exclusions and more:


Advertising, Marketing and Media

Learn about media liability insurance - a specialized form of professional liability insurance policy that provides protection for legal claims brought by third parties.


Agribusiness

Learn about small business agribusiness insurance - a type of commercial insurance protects farmers against loss of, or damage to crops or livestock.


Arts and Recreation

Read up on small business arts and recreation insurance.


Auto Sales, Service And Repair

Read about auto sales, service & repair insurance, which provides protection for damages done to customers vehicle's and other property as well as injuries resulting from the work done.


Aviation

Learn about aircraft and aviation liability insurance - a specialized form insurance that provides coverage for hull losses as well as liability for passenger injuries, environmental damage and third-party damage caused by aircraft accidents.


Bonds

Learn about surety and fidelity bonds which are types of insurance that are used to protect against damage or loss in commercial transactions.


Children And Pets

Discover what business insurance policies cover for children and pet related small businesses.


Commercial Property

Read up on commercial property insurance coverage, including how business property insurance protects your company's building's and/or their contents from damage, destruction, theft and vandalism.


Construction Contractors

Learn about construction contractors insurance, including how much the premium costs and what is covered - and how liability insurance can help protect your construction business from lawsuits.


Contractors And Home Improvement

Learn about contractor's insurance, including what it covers, how much it costs - and how business insurance can help protect your small business from lawsuits.


Education, Colleges, Universities And Schools

Learn about insurance for educators that helps protecting your professional reputation and other legal liabilities arising from your educational services.


Financial Institutions

Discover the types of commercial insurance that banks, finance companies and other financial institutions need to protect their asset management, deposit, lending, investment and other operations.


Food And Drink

Learn about restaurants, bars, liquor stores insurance coverages. See how food service insurance help protect against accidents, oversights and lawsuits resulting from business operations.


Health And Beauty

Learn about small business health and beauty insurance coverages that help protect tattoo artists, salons, spas, estheticians, cosmetologists, barbers, hairdressers, nail salons and more from legal liability.


Information Technology And Internet

Learn about IT technology insurance policies that help protect IT businesses, consultants & subcontractors from the unique risks that small tech businesses face when they work.


Local, State And Federal Government

Discover what types of commercial insurance government entities need.

Lodging Places

Find out what types of business insurance that hotels, motels and other lodging places should have to protect their varied operations.

Manufacturing

Learn all about manufacturing insurance. Manufacturers face many unique risks such as product liability and/or product recall exposures due to the nature of their business operations.


Marine, Boat And Watercraft

Learn about marine, boat and watercraft insurance - a specialized form insurance that provides coverage for hull losses, cargo losses as well as liability for passenger injuries, environmental damage, and third-party damage caused by watercraft accidents.


Medical And Dental

Discover small business insurance for medical and dental professionals. Medical malpractice insurance is a type of professional liability policy that protects health care professionals from liability causing in bodily injury, medical expenses and property damage.


Miscellaneous

Find informative articles on miscellaneous businesses including the types of insurance policies and coverage they need, costs and other considerations.


Non-Profit

Find useful articles on business insurance for non-profit 501(c)(3) organizations, charities and associations.


Professional Services

Get informed about professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your small business against claims that a professional service you provided caused your client financial loss.


Real Estate

Learn about real estate insurance coverages including liability and commercial property policies for realtors, mortgage companies and more.


Retail

Read valuable retail insurance policy information. In a retail business, you need to have the right type of business insurance coverage so that your store, employees, and inventory are protected.


Small Business Commercial Auto

Learn about commercial auto insurance which includes liability and physical damage protection for vehicles that are used for business purposes.


Small Business Insurance

Protect your company and employees with insurance coverage. Read informative articles on small business insurance policies - and how they can help shield your company from legal liabilities.


Sports And Fitness

Learn about sports & fitness insurance policies and what they cover so that your customers, employees, and equipment are protected.


Warehouse And Storage

Learn about warehouse and storage insurance - which protects storage and warehouse facilities and protects their inventory from property damage from fire and weather, vandalism and theft and liability coverage as well.


Wholesale And Distribution

Read informative articles on wholesale distribution insurance. Distributors and wholesalers face specific risks including fire, flood and weather damage that can destroy products in the distribution center - and every part of the supply chain including late supplier shipments to unpaid invoices - can effect the entire operation.


Workers Compensation

Learn about workers compensation insurance - a policy provides medical, wage and other benefits to employees who are injured or become ill at work.


Small Business General Liability Insurance Information

Additional Resources For Small Business Insurance

Small Business Commercial Insurance

Your small business faces many potential disasters including: fire, floods, theft, equipment breakdown, lawsuits from clients or customers and current & former employees. Any many other risks you haven't even thought about.

A small business commercial insurance program should provide protection for both larger and smaller disasters. The obvious things like fire, flood and theft most business owners think about... but what if a hacker infects your computers with a virus - and files containing private customer information like credit card and Social Security numbers are stolen?

Who is going to pay to fix your customers credit rating etc...? Will your insurance pay for the cost? You need to know that.

Your commercial insurance program should cover events that can close down your company, or cause it to lose revenue. Anything less than that is not enough coverage. Commmercial insurance doesn't cover everything, and all policies have exclusions and limits.

You need a written plan that allows you to get your operations back up and running as quick as possible.



Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.

Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Workers Compensation InsuranceWhat is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law
Small Business Commercial Insurance

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.

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Disclaimer
Disclaimer
The commercial insurance content available on this page is for informational purposes only and not for the purpose of providing legal or financial advice.

General Liability Insure does not warrant or make any representations regarding the usefulness of or the expected results of the material contained on this website. You should contact your attorney, accountant and/or financial adviser to obtain advice with respect to any particular commercial insurance question, claim or issue.
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