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What is General Liability insurance?
Home » Small Business » General Liability » What is General Liability insurance?General liability insurance protects your company’s finances in the event of a lawsuit prompted by charges of negligence or failure to use appropriate care. As with any other kind of insurance, the insured (in this case, your company) pays a monthly or yearly premium for insurance coverage. In the event of a lawsuit, the insured will usually pay a deductible, and then the insurance company will pay the remaining expenses up to a preset limit.
In most cases, general liability policies cover legal fees and court costs, as well as damages awarded by the court or a court settlement. There is no limit on liability claims, so the total payout of a liability claim could be anywhere from hundreds of dollars to millions.
There is a wide variety of general liability policies, but in almost all cases, general liability insurance protects businesses in response to claims of bodily injury, property damage or loss, advertising injury, and personal injury. Bodily injury differs from personal injury in that bodily injury claims are based on physical injury while personal injury refers primarily to slander or other injuries on a person’s reputation. Advertising injury involves claims based on false advertising or other forms of negligent promotion.
Liability lawsuits are especially dangerous to companies because individuals can make liability claims years after an incident occurs. Most general liability policies protect a company only for incidents that occur during the lifespan of the policy, but there are some that cover a claim based on when the claim was filed.
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