If you own any type of business, large or small, then you’re at risk of getting hit with a lawsuit. Even companies with the safest, simplest products need liability insurance.
Accidents and lawsuits are significant financial threats to any small business, but insurance is an easy way to prevent your company from folding under the substantial financial burden.
General liability insurance saves small business owners from paying out of pocket for legal or medical costs in light of a business-related accident. Understanding commercial general liability insurance and how your business can get covered is the first step to securing your business’s financial wellbeing.
What Does CGL Cover?
Commercial general liability insurance, or CGL, protects your business if you’re found accountable for non-professional negligence that results in injury to an individual or an individual’s property. It will help you pay for any medical or repair bills related to the accident.
There are three general categories in most CGL policies that will protect your business:
- Bodily Injury and Property Damage Liability– CGL pays for legal damages related to property damage or bodily injury to third-party individuals, such as customers or vendors, caused by your business.
- Coverage for Medical Payments– While you’ll still need workers’ compensation to cover most employee injuries, CGL can cover medical payments for third-party individuals injured by your business. Expense coverage can include medical, surgical, ambulance, hospital, professional nursing, and funeral expenses. Even if you reach a settlement or there is no legal action, CGL will help pay for these expenses.
- Personal and Advertising Injury Liability– CGL saves you money by covering many lawsuit-related costs if you’re sued for copyright infringement or other personal and advertising injuries. If you’re accused of libel, slander, copyright infringement, invading someone’s privacy, and a host of other injuries, CGL can help pay for legal expenses your business may need.
What Does CGL Cost?
CGL costs vary by a business’s size, industry, location, and a slew of other factors. Higher-risk fields, such as construction, will come with higher premiums than a fashion boutique. Other cost factors include how long you’ve been in business, where your business is located, your industry’s exposure to certain risk factors, and your deductible.
Why Consider CGL Coverage?
While CGL isn’t required by law, it still may prove cheaper in the long-run than paying for an accident down the line.
No matter how careful you and your staff are while on the job, accidents happen. Maybe a customer trips on a frayed carpet at your store, or an advertisement you run results in a faulty claims lawsuit. Businesses face limitless possible risks, and CGL protects your business from financial ruin when those scenarios happen. If you’re not totally sold on CGL coverage, consider the following:
- Lawsuits Cost Money, Even If You’re Not Found at Fault– As the number of lawsuits filed against small businesses increases, being in an industry that is generally safe with low lawsuit claims won’t matter much. CGL will pay for many lawsuit-related expenses if your business is sued.
- By Nature, Your Industry Poses Risks– Owning a business is in and of itself a risk. Learn what the highest risks are for your trade, and rest assured that CGL will protect you when your business ultimately is faced with those risks.
- Administrative Costs Add Up– Businesses need to pay for people to help with risk management and other administration costs. Without CGL, those administrative costs could skyrocket in the case of a work-related accident.
- Accidents Happen– All it takes is one customer falling on a slippery floor for your business to be responsible for someone’s medical bills. CGL significantly decreases those costs for your business.
- Advertising Errors are Easy to Make– An accidental copyright infringement related to a font or color used in an advertisement can result in a costly lawsuit. You’ll want CGL to pick up some of the financial burdens if you ever find yourself facing an advertising error or copyright infringement lawsuit.
CGL and Small Businesses
In a litigious society, even traditionally safe industries can face a costly lawsuit. While CGL is not legally required for your business, it is still a smart and comparatively inexpensive way to protect yourself from an accident. CGL insurance covers an array of potential risks, so you can sleep well at night knowing your business will be safe in the case of a costly accident or lawsuit.
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