Does Your Business Have a General Liability Insurance? Here are the Pros of Having One!

Mallika Khandelwal

17th Aug'22

Most small businesses need this insurance, particularly if they rent or own an industrial or business property. And many customer contracts contain obligations for general liability insurance.

General business liability insurance, often known as CGL coverage, is typically beneficial for small firms that engage directly with clients and consumers. 

This is true even if none of those above circumstances apply to your company. If your firm gets sued by a client or a rival business, having this insurance coverage might help keep the financial doors open for business.

Since general liability insurance offers such significant protection, the vast majority of small business owners decide to purchase a policy as soon as they establish their company.

 

What Exactly Does General Liability Insurance Entail

Seventy-five per cent of businesses in the United States have inadequate insurance coverage. Considering the possible level of harm that an unexpected occurrence can inflict on a firm, this is a startlingly high amount. A little less than half of all businesses in the United States that are struck by natural disasters never operate again.

Protection against legal claims brought against an organization is an essential component of a company's all-encompassing risk management plan. Nevertheless, let's say you've never purchased commercial liability insurance before.

In that case, you can be interested in learning more about the potential benefits that might accrue to those individuals and businesses who decide to use it for their operations.

You need to be aware of the following benefits of general liability business insurance, and we will detail them for you below; however, there is much more to general liability insurance. 

How General Liability Insurance Protects Your Business

General liability insurance, also known as CGL insurance, acts as a financial safety net if you are sued for an injury that took place at your place of business, for damaging the property of a customer, or for causing an injury to advertising in the form of slander, a violation of copyright, or libel.

Your business's general liability insurance will cover the reasonable expenses of defending your company in court. This includes expenses for the attorney, the court, and any expert witnesses that can be required. 

In addition, it compensates you for any financial damages you suffer due to actively engaging in your defense. The general liability insurance also covers any judgments or settlements linked to your case, in addition to the medical costs incurred by the plaintiff.

Settlements and court judgments can quickly put a small firm out of business when dealing with instances involving severe injury or damage to property. General liability insurance is one of the most prevalent types of insurance plans.

The following are not covered by general liability insurance: 

  • Losses or injuries caused by your carelessness or negligence.

  • Your residential or business property, whichever applies.

  • Your automobiles or boats, if you have them.

  • Your private and sensitive information has been compromised.

  • Services of a professional kind are rendered to a customer.

  • Accidents, injuries, or illnesses that occur within your workforce.

  • Any harm or damage you purposefully inflict on others.

  • Any intellectual property.

 

General Liability Insurance

 

The Ultimate Benefits of General Liability Insurance

The following is a list of the top advantages of having general liability insurance:

 

Advantage 1: Offers Protection Against Employee Actions 

An adage goes, "Good aid can be hard to find." Even while you probably make an effort to retain the finest possible team, it can be challenging at times to protect against the behaviors of employees or staff. This encompasses anything as little as defamation or something as severe as an event resulting in injury or damage to property. 

In certain circumstances, these kinds of lawsuits that are launched against you by third parties could be covered under the umbrella of your general liability insurance policy. On the other hand, there are situations where you could be required to add a particular provision or even a new policy known as personal liability coverage.

 

Advantage 2: Injury or Accident Claim Protection 

When you operate a company, you have a responsibility to do all in your power to eliminate the possibility of any accidents occurring. Even though you can do your hardest, it is impossible to prevent the occurrence of accidents and injuries. And the last thing you desire is for a mishap to occur at your company when you lack the appropriate insurance coverage for the predicament. You need to get "just in case" insurance in the form of general liability insurance if unanticipated incidents occur and pay for legal fees. 

The greater your time near customers or staff, the greater the likelihood that something unfortunate can occur. Injury claim protection is one of the most advantageous perks that come with liability insurance. You will have the necessary insurance coverage if a customer claims you, blaming you for an injury they got due to that accident. You will be able to compensate yourself and the firm with that coverage.

 

General Liability Insurance

 

Advantage 3: Offers Protection Against Cybercrime 

Cybercrime is a very serious risk in the modern world, one that affects millions of organizations on an annual basis. Your company might suffer irreparable damage, both financially and in terms of its reputation, as a result of a single act of cybercrime. Because of this, you should always be ready for a cyberattack to strike your organization. Having adequate protection against cybercrime is one method for achieving this goal. 

If your company is ever the victim of cybercrime, having a general liability insurance policy that also covers data breaches will assist you in getting things back on track as fast as possible. The insurance coverage compensates for any legal fees, charges related to cleanup, and any other costs linked with data breaches.

 

Advantage 4: Helps Minimizing Financial Losses in Your Business

You can prevent events that might be very detrimental to your organization with the assistance of several types of insurance and by knowing the marketing tactics (it’s a plus!). Several different approaches might help protect both you and the firm. It is essential to have commercial insurance to safeguard your company in the case of a covered loss as well as if legal action is taken against it. 

If you do not have insurance for your firm, you run the risk of being liable for the costs of any necessary repairs, replacements, medical bills, and attorney fees in the event of an accident. If you don't have the financial resources to pay for it, this might be detrimental to your organization.

 

Advantage 5: Safeguards Important Information 

The safeguarding of sensitive data is essential. If your company keeps the information about its clients, such as their names or addresses, in its files, you must have liability insurance. To protect your company if it is the victim of hacking, several types of insurance now include an electronic data responsibility clause. 

Please keep in mind that you can have other options available if your general liability coverage does not cover specific scenarios. Another alternative is to get cyber liability coverage, a kind of insurance that might potentially be of assistance in this situation.

 

General Liability Insurance

 

Is General Liability a Legal Requirement?

In most cases, no; nevertheless, some sectors, like construction, can be subject to government mandates requiring it. Although general liability insurance is not normally needed by law, you should check with your landlord, mortgage company, and clients to be sure they require it.

It is possible that a landlord or a customer would request that your company provide a certificate of insurance as evidence that it has general liability insurance coverage. This document proves that your company can defend itself against claims alleging bodily harm or damage to property.

In addition, and perhaps most crucially, the certificate assures your property management, bank, or client that they will not be responsible for paying the expenses of a lawsuit brought against your business.

 

Still Confused? You Absolutely Need General Liability Insurance for Business!

If you are still wondering whether or not you need commercial liability insurance, the emphatic response is yes, you certainly do. The importance is similar to why your organization needs a privacy notice.

If incidents occur at your business, having this protection in place might shield you from possible harm, save you money on legal fees, and make you feel more at rest.

Every small company has to take precautions against possible emergencies. Nobody can predict when a catastrophe can occur. 

If anything unexpected were to happen to your company, having general liability insurance for businesses would allow you to get things back on track quickly.

 

We at OpenGrowth, are committed to keeping you updated with the best content on the latest trendy topics from any major field. Also, both your feedback and suggestions are valuable to us. Do share them in the comment section below.

A staunch proponent of karma, Mallika believes in what goes around, comes around philosophy. She is ecstatic with her life and strives to live it to the fullest.

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