 General liability insurance is designed to protect a business in case of claims regarding bodily injury and property damage that occur on the business property. While general liability provides coverage for most accidents that happen on a business’ premises, it doesn’t cover everything.
Basic Bodily Injury and Property Damage
General liability covers three main areas: bodily injury, property damage and personal or advertising injury. Advertising injury refers to claims regarding libel, slander, copyright infringement, wrongful eviction and more. For example, if another company believes yours stole their logo, that company may sue you for copyright infringement.
Property damage may help with compensation for those whose property is lost or damaged due to the business’ everyday operations. Bodily injury coverage will help with the victim’s medical payments as well as any related lawsuit that falls back on the business.
All of these coverages refer to accidents. General liability does not cover intentional damage, harm or injury, whether by employees or the company as a whole. It will not cover fraud or employee theft.
Professional vs Non-Professional Negligence
In business insurance, there are two types of negligence: professional negligence and non-professional negligence. General liability insurance covers non-professional negligence. This means it covers accidents of bodily injury and property damage that do not occur as a direct result of a professional or specialized service. General liability insurance does not cover professional negligence. Professional negligence is considered a violation or breach of duty in contract between a professional and their client. For example, if a medical professional makes an error that in turn harms a client, that medical professional can be accused of professional negligence. This type of incident is covered under professional liability insurance rather than general liability insurance.
Employee Injuries and Accidents
General liability insurance covers injuries and accidents on the business property, but this does not apply to employees who are injured on the job. If an employee is injured while working, their injuries and any possible legal fees that fall back on the company should be covered under workers compensation insurance. General liability insurance also does not cover injuries or property damage that occur due to a fight between employees.
Damage to the Business Property
As a liability insurance, general liability covers damage to another person’s property. It does not cover damage or loss of the business’ property, even if that property is related to a simple accident. Any property or equipment damage should be covered under the business’ commercial property insurance.
Liability for Directors, Officers and Employees
Overall, general liability insurance won’t cover claims made specifically against directors, officers and employees of a business. Many employee lawsuits tend to fall under professional liability, while directors and officers lawsuits cover incidents besides bodily injury and property damage.
Directors and officers of a business’ board should be covered under directors and officers insurance, also known as D&O insurance. This insurance covers claims regarding:
These claims may come from clients, employees, coworkers, shareholders, third parties and other entities that have financial stock in the company’s performance.
Expanding General Liability Insurance
Even with exceptions, general liability insurance is crucial for all businesses. For higher coverage, may businesses choose to bundle general liability and other coverages into a single business owners policy (BOP). A common addition to these policies includes umbrella liability insurance. Umbrella liability insurance provides additional coverage limits to all liability policies, including general liability, professional liability and more. This insurance covers the remaining costs after a single liability policy reaches its limits.
Posted Wednesday, June 10 2020 2:38 PM
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