What is a General Liability Insurance?
A Comprehensive General Liability Insurance is a type of business insurance that is there to help protect you against any claims resulting from any kind of property damage or bodily injury that may be caused by your business operations, its products, or on your premises.
Say a client or a customer came into your office for a meeting, and they missed seeing the "Caution wet floor sign" that was put out and ended up slipping, falling and breaking their arm! Or, if during a meeting someone in your office accidentally spills water over a client’s phone and damages it.
Sounds awful, right? Well, what is worse is if you are found liable, meaning that you end up having to compensate for the trouble and damages caused!
In situations like these, a Liability Insurance covers you like an umbrella, protecting you from any problems arising out of injuries and damages to people or property.
Want to know why a General Liability Insurance is important?
Why do you need a General Liability Insurance?
A General Liability Insurance, which is also known as a Commercial General Liability (CGL) policy, is a type of insurance cover that businesses need to protect themselves against any legal liability for property damages or bodily injuries to any third party, like your business associates, customers, or clients. But why do you really need it?
What does a General Liability Insurance cover?
When you get a general liability insurance, you’ll be covered for...
NOTE: Please refer to your policy wordings for detailed information about coverage, exclusions, and conditions.
Types of businesses that need a Liability Insurance
If you’re a business owner and especially if your operations have a lot of interaction with third parties, you might benefit from getting this insurance:
How to choose the right General Liability Insurance policy?
Things to remember before getting a Liability Insurance
- Remember to always check what is and is not covered under your liability insurance, read through the terms and conditions so you won’t be surprised by anything later.
- Pick the right Limit of Liability; when you have a higher limit of liability or sum insured your insurance premium too will be higher. But don’t choose a low sum insured just to save on your premium rather on the potential cost of any damages for your own peace of mind.
- Look for the best value by evaluating all the factors together - from the sum insured and premium to the coverage and opt for a liability insurance policy that gives you the best value.
- Pick the right policy based on nature of your business, for example a retail shop (like a boutique or a grocery store) gets lots of customers, but doesn’t make any products, so they would need a public liability insurance, but not a product liability cover.
How much does a General Liability Insurance cost?
When an insurance company is calculated your general or public liability insurance premium, they will decide it based on a number of factors, like:
Nature of your business – every business is different and its operations have different amounts of risks associated with them, so your premium will factor this in. (For example, a factory might pose more risk to visitors than a bookshop)
Type of products – the risk to your business will also depend on the products or services provided by your business
Size of your business – generally, the larger your business is, the higher its value. So, your general or public liability insurance premium will also increase
Claim history – How many claims your business has made in the past will also be a factor that affects the premium
Location – The location that your business is based in will affect your liability insurance premium for the simple reason that, different towns and cities comes with different levels of risks
Number of locations – when your business operates in many different locations, it will have a higher level of risk
Estimated turnover – your premium will also be based on the estimated turnover of your business
Other factors that might affect the insurance premium are the environment, occupancy, territorial and jurisdictional exposure, and your business record. And in general, whatever contributes to a higher risk will end up increasing the premium amount to be paid.
What is the difference between General Liability Insurance and Public Liability Insurance?
A public liability insurance is a policy that is quite similar to general liability insurance, but they differ from each other regarding their purpose and coverage. Let’s take a look at public liability insurance vs general liability:
Public Liability Insurance
General Liability Insurance
What is it?
A public liability insurance covers you and your business against any third party injury or damage claims on the premises.
A general liability insurance covers a wider range of incidents, including any injury to a third party person or property at your business.
Basically, this covers injuries, damage to any members of the public (or third-parties) on your business premises. This can include customers, visitors, and delivery personnel.
This is a much more comprehensive cover for your business which not only takes care of your third-party liabilities but also covers for you in other situations, like advertising injuries and personal injuries as well as any injuries or damages that take place because of your business's operations.
The premium will be slightly lower with a private liability insurance than a general liability insurance.
General liability insurance covers everything that public liability insurance does and also covers personal and advertising injury.
This coverage only applies to your business property, so if you or your employees incur any damage elsewhere, like in a client’s home, it may not be covered.
The premium will be slightly more expensive than a private liability insurance.
Common General Liability Insurance Terms Simplified for You
Other Liability Insurance Policies
Since, as a business owner, you will be exposed to a wide range of liabilities, it can be important to see what all kinds of liability insurance coverage are available out there (apart from public liability insurance and general liability insurance):