If you are the owner of a small- to medium-sized business, you’re undoubtedly aware that whenever you open your doors, you expose yourself to a myriad of prospective liabilities. No matter how cautious and conscientious you might be, it just isn't possible to anticipate every conceivable problem that can appear in the course of regular business operations. Combine this basic fact of life with the lawsuit-happy climate in today's business world, and safeguarding your company with adequate general liability insurance takes on a greater importance than ever before.

Who Needs It?

General liability insurance (also referred to as commercial general liability or CGL) is critical for anyone who is establishing a new business venture, or who's concerned with better protecting his current one against legal actions. No matter whether your operation is based in a store, office space, mobile location, or over the internet, a CGL will guarantee that your personal property and assets remain safe if your business is ever you're sued.

What Types of Claims Does It Cover?

Not only is it the most-common kind of coverage carried by small business proprietors, but general liability insurance is the most-comprehensive as well. The policy covers legal costs associated with any covered liability claim that is levied against the insured, in addition to any general or compensatory damages (punitive damages are not included, however) that may be awarded to the plaintiff as part of a settlement.

There are usually three types of claims paid by CGL policies, although a fourth (covering any “advertising injury” that results from intellectual property infringement, libel, and slander) could also be contained in certain coverage plans. The different kinds of claims covered by all general liability policies are:

  • Personal injuries caused by any intentional or negligent acts by you or your employees
  • Bodily injuries sustained by customers, employees, vendors, and visitors while on the premises of your workplace
  • Property damage resulting from the actions or negligence of you or your staff

Exactly How Much Does It Cover?

General liability plans cover insured claims up to a maximum amount (i.e., limit) for the duration of the policy period. Due to the fact that most business owners prefer additional protection of their financial assets above and beyond the amount specified in the policy, however, umbrella policies (which provide coverage for amounts exceeding the policy limit, and over any gaps in the policy) can also be incorporated into your coverage. Clearly, as is true with any insurance policy, the amount covered is negotiable dependent upon your particular business’ profile.

What Does It Cost?

A GCL plan can cost from a few hundred, to several thousand dollars annually, depending upon the type and size of business you own. Determining the amount of coverage you need and, as a result, just how much it will cost, calls for an assessment of the amount of risk associated with your business, the area where your business is located, and any other factors relevant to your specific case.